BRIEF: Banks should offer 30-year fixed rate loans: RBI panel
MUMBAI, Jan 23, 2013 (Menafn - Mint - McClatchy-Tribune Information Services via COMTEX) --A Reserve Bank of India (RBI) committee has proposed that banks should offer fixed-rate loans with up to 30-year maturity to help reduce the monthly repayment burden on borrowers.
The panel, set up to assess the feasibility of introducing long-term fixed-rate loan products, is chaired by K..K. Vohra, chief general manager, internal debt management department at RBI.
The central bank said in a statement on Tuesday it will examine and initiate appropriate action on the panel's recommendations.
The panel also recommended that banks should offer fixed-rate long-term loan products with periodic interest reset provisions, in addition to plain vanilla fixed-rate loan products.
It also encouraged pension funds, provident funds and insurance companies to invest in bonds issued by banks. According to the panel, banks should popularize fixed deposit schemes with tenors of above 5 years as these are eligible for tax exemption.
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