LIC Housing Finance: Tells NHB its product is not teaser loan

V.K. Sharma, CEO and Director, LIC HFL

LIC Housing Finance (LIC HFL), main arm of India's largest insurer Life Insurance Corporation of India (LIC), has approached the real estate sector regulator, NHB (National Housing Bank), requesting it not to treat the company's New Advantage -5 product as a teaser loan scheme.

According to Mr. V.K. Sharma, CEO and Director, LIC HFL “We are trying very hard to get clearance from NHB on the New Advantage-5, as soon as possible, that it is not a teaser loan product.loans dis bursed under New Advan tage-5 are not under tease schemes. We are literally after the NHB to get a clear mandate on teaser products"

LIC HFL's New Advantage -5 offers fixed interest rates on home loans for the first 5 years and floating rates thereafter, which are linked to prevailing PLR (Prime Lending Rates).

Fixed & floating rate home loans were called ' teaser loans' because of their ability to attract borrowers with a lower interest rate in the initial years.

Last year  NHB had  mandated the housing finance companies to make a higher provisioning of 2% for teaser loan scheme offered by them, on concerns that the loans could turn bad. This is much higher than the 0.4% provisioning required for standard home loans.

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