Dec 23, 2008 12:11 PM
4950 Views
(Updated Jan 15, 2009 10:59 AM)
Now that even HDFC Bank, has reduced the Home Loan rate for existing customer by 0.5%, ICICI will come up with another master strategy.
They will announce a reduction of 0.75% for their existing customers some time in the first week of January 2009.(They are buying time, since if they announce this now, the effective rate has to come into force from January 2009.) But if they announce this only in January then they can justify that the policy will come into effect from April 2009 onwards.(As we existing customers all know by now, any increase in rate of interest will be immediate from the next month onwards, irrespective of which quarter you are in, but any reduction will have to wait until next quarter as per their signed stated policy).
Before April comes by, ( by mid March) ICICI will announce that due to change in market conditions we are not in a position to implement the announced reduction and will revert back to the orginal rate of interest as its today.
This way they would have in a big way announced to the whole world that they have cut their interest rates for Existing customers(in news papers and media reports), thereby everyone who reads that will be lured that ICICI bank is afterall NOT ALL THAT BAD as we existing customers portray them to be. But the announcements that the announced reduction will not be effective will only come to us in the form of a snail mail, post April 2009 and only we will know about their double standards.
This is ICICI's strategy and this is how they have played in the last few years. I write this in December 2008. wait and see if this is what is going to happen or not.
My strategy & suggestions.
- People who want to move to other PSU banks - Good option if you have an outstanding loan of 10 lakhs or more.
You will have a lot of hurdles like
a. Finding another bank who will refinance your loan without your original papers. ICICI will take atleast one month even after you have paid your oustanding Balance.
b. There is atleast 50% chances that ICICI bank cant locate your original papers that you submitted to them at the time of taking your home loan. Above 2 points are beyond your control.
c. ICICI bank will ask you to pay 2.25+ 12.36% Service charge as penalty.
Assume you have an outstanding loan of Rs. 15 Lakhs.(for calculation purpose)
You will end up paying Rs. 37, 900 appr for moving out of ICICI bank.
Something like 2 EMI's. But dont you think this is better compared to getting stuck with these idio for atsnother 20 years of uncertainity about rising rates again and remaining loyal to this bank?
People moving away from ICICI Bank please ensure that you dont have any more accounts, credit cards, Demat accounts, ICICI Prudential accounts etc etc any more with them. Or else the ghost from the past will come back to haunt you in some form. Take this warning seriously.
- People who have O/S balance of 10 Lakhs and below. Not a great idea to move to any other Banks considering the herculian tasks to move out.
Instead try these options.
a. Pre payment of Principal amount as much as you can. You can generate and tune all your surplus cash with you to pre pay the amount. You can pre pay a max of 4 times in a year without any penalty. I suggest accumulate to a tune of 1 lakh and above each time and try and make pre payment of atleast 3 lakhs a year.
b. Minimise your other expenditure, expenses for the next 3 years. Target to close your Home loan within a max of 2 - 3 years on a war footing basis. Even if this means you have to break your FD, RD, Post office savings, Insurance cash back - anything and everything. Atleast you will see that you are dept free in 3 years from now. and then you can start on your savings minus the loan guzzler.
All of us need to take one promise today. I will educate and atleast stop another 100 people whom I know about the way ICICI bank cheats its customers both NEW and OLD. I will ensure that NOT one person known to me, a friend, acquaintance or even an enemy will approach ICICI bank for any form of Loan - home, auto loan, personal loan . If each of us does this, thats the biggest PAY BACK that we can give ICICI bank. They will not have a single customer in the next 2 years approaching them and we will see it happening before our lifetime.
With ICICI Bank your Home loan will pass on to your children NOT your home.!
Good Luck!
Gerald Victor
