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L.N. Revathy

Coimbatore, Jan. 7 Bank of India has launched a special package — ‘Star Home Loan Scheme’ — applicable only to new borrowers of home loans. The package was launched in mid-December and would be open for six months up to June 30.

While stating that the package is for new home loan borrowers, the bank has, in an internal communication, clarified that ‘it would not apply to swapping of loans’ (take over of loans from other banks/financial institutions).

Besides revising the margin, and waiving the processing and prepayment charges under the package, the bank has decided to offer the loan at a fixed rate (at 8.5 per cent for limits up to Rs 5 lakh and 9.25 per cent for limits between Rs 5 lakh and Rs 20 lakh) up to 20 years.

The circular was not very different from those issued by other banks except on the issue of insurance, where probably, the bank preferred to offer something more to the new home loan borrowers.

The bank, the circular states, ‘will bear the ICICI Prudential life insurance policy premium charges by debiting it as miscellaneous charges in its profit and loss account.’ (At present the home loan borrower can avail the option of the ICICI Prudential life cover, but the premium is payable by the borrower).

While reminding that the bank has an existing tie-up with National Insurance Company, the All India Bank Employees Association General Secretary, Mr C.H. Venkatachalam, asked, “where is the need to support ICICI, and that too by bearing the premium on behalf of the borrower?”

AIBEA is planning to raise this issue to reiterate that Bank of India should instead support a public sector insurance company.

More Stories on : Housing Finance | Public Sector Banks

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