Moneylife has already pointed out how State Bank of India’s (SBI) ‘zero processing fees’ offer is a sham (it merely harasses customers by transferring the cost and burden of getting various documents verified on to them) and its teaser interest rates will rise soon enough. For many months now, bankers have been agitated at SBI’s predatory action, especially since it has happened so soon after a global financial crisis. Nobody really wanted to be sucked into a price war that would sap profitability. They waited for the Reserve Bank of India (RBI) to force SBI to cease and desist. Nothing happened.
Finally, one by one, others were forced to join the home loan war—HDFC, ICICI Bank, Kotak Mahindra Bank and even IDBI Bank are now offering home loans at just over 8% interest for a two-year period, after which the prevailing floating interest rate would apply. What happens to borrowers who find their repayment commitments suddenly shooting up after two years? What explains RBI’s silence? Maybe the confidence that those who sanctioned the predatory lending policy and those who failed to stop it will not be in the same posts to be held responsible for the consequences.
Tailpiece: Until recently, the NSE website used to list NSDL as an ‘NSE group company’. That meant that when the SEBI board depended on the legal opinion of C Achuthan, a director of NSE, to reject as void an order of its M Gopal-Leeladhar bench, Mr Achuthan clearly faced a conflict of interest. The fact that his opinion was nevertheless sought only underlines the widespread allegations of regulatory capture by the NSE. After a leading newspaper commented on this conflict, the NSE seems to have quickly changed the relevant information on its website. It now calls NSDL an ‘affiliate’, not a ‘group company’. We are flummoxed at how this little plastic surgery would lessen the impact of the conflict issue when the NSE has indeed promoted NSDL and still holds a significant chunk of its shares.