Banks wooing home loan customers?

Here is an article from Business Today about banks lowering charges, giving discounts and waiving off fees to woo home loan customers.

ICICI Bank on Friday launched a limited period offer of one per cent cash-back on gross EMI (equated monthly instalment) value as part of a festival scheme. "Under this cash back offer, one per cent of every EMI will be returned to the customer, apart from providing the option of renewable fixed interest rate for the entire tenure free of cost," the bank said. 

 Customers can choose to avail of this cash back offer either in the form of a credit to their account or in the form of a principal pay-down, it added. The offer will run through the end of December for new customers. The scheme covers renewal/switchover of fixed/floating rate loans without any processing fee, ICICI Bank Executive Director and Retail Business Head Rajiv Sabharwal told reporters in a conference call. 

The cash back money could be credited to the borrower's account or adjusted against the principal outstanding from the third year including the first two years' dues, and by the end of the fiscal from fourth year onwards, Sabharwal said. When asked whether the bank has priced in the impact of the new offering on the margins, he said, it will be negligible and that the focus is on customer retention by rewarding loyal customers. 

As credit pick-up remains lukewarm, many banks have launched attractive schemes to woo customers in. Last month, its rival Axis bank launched a scheme wherein a home loan borrower will get 12 EMIs waived if he/she remains with the bank for 15 year or more. 

Many state-run banks, including SBI, UCO Bank, Vijaya Bank, and Central Bank, have hit the market with combo loan offers, wherein a home loan customer gets a car loan without the process fee, apart from slashing interest rates by up to 0.50 per cent and the processing fee by half.