Canara Bank opens its first ultra-small branch in TN

Canara Bank opened its first ultra-small branch in the State and second in the country, at Oorseri Panchayat near Alanganallur, near here, recently.

Linked with Core Banking Solution through a virtual private network, the branch, staffed by a Business Correspondent, would be open on all seven days in the week. All account holders are to be issued with smart cards and deposits and disbursals with an upper limit of Rs 2,000 would be facilitated, besides linkage of loan applications to the parent branch. The first branch has been opened at Aralumallige in Karnataka.

According to Mr K. Lakshmipathikumar, Deputy General Manager, the concept has been introduced to cover villages with a population between 1,000 and 2,000, under the financial inclusion programme. An officer from the parent Alanganallur branch would visit the ultra branch once a week and monitor the functioning of the Business Correspondent.

Despite good recoveries, Canara Bank net down

Higher provisioning during the quarter caused a 21 per cent dent in net profits for Canara Bank during the third quarter of this fiscal. The bank posted net profits of Rs 876 crore.

“Our profit would have been higher but for two reasons. One major account was restructured, and we had to provide Rs 150 crore for impairment of fair value; and because of spike in government yields, we had to provide Rs 185 crore for depreciation on investments,” said Mr S. Raman, Chairman and Managing Director, Canara Bank.

Income, expenses up

Despite the bank's interest income going up 33 per cent, its interest expenditure was up almost 56 per cent, impacting the bank's net interest income, which was down 8 per cent.

However, Mr Raman said that the bank had good cash recoveries this quarter too. “We have increasingly been successful in recovering, with recoveries during the first nine months at Rs 2,346 crore, compared with the full-year's cash recovery of Rs 2,032 crore last year,” he pointed out.

Higher NPAs

Non-performing assets have gone up, he said, adding that the bank has “embarked on addressing the NPA issue very aggressively”. According to him, slippages are coming down every quarter. “We have arrested negative aspects of assets, and are very choosy about credit expansion,” he said. Mr Raman pointed out that it has been a very difficult year for the banking system as a whole, and expected the next quarter to be better.

“The sentiments have improved now, and banks like us which were careful in balance-sheet expansion this fiscal, are ideally suited for better growth next year,” said Mr Raman. He, however, did not expect sentiments to take effect in the next couple of months.

On the credit portfolio, he said Canara Bank was not aggressive in expanding its credit portfolio and expected a full-year credit growth of about 16 per cent for FY12. “We felt it was better to grow at an average rate, and it was a time to be conservative. It was not about risk aversion,” said Mr Raman. Net advances of the bank grew 15.5 per cent this quarter.

Ensure rotation of officials in sensitive posts: CVC to banks

Concerned with instances of alleged irregularities in public sector banks, the Central Vigilance Commission has directed them to ensure timely rotation of officials working in sensitive posts to check corruption and avoid “vested interest“.

The anti-corruption watchdog has also told the Chief Vigilance Officers (CVOs) of the banks to strictly comply with its orders and to furnish an action taken report in this regard every month.

It said that all CVOs were asked to identify the sensitive posts which were prone to corruption and to ensure that “officials posted on sensitive posts are rotated every two/three years to avoid vested interest“.

The CVC noted that its earlier instructions in this regard were not being strictly followed which is a matter of “serious concern“.

“The Commission would once again emphasise that periodical rotation of officials holding sensitive posts/jobs especially at senior levels need to be ensured,” the Commission said in a recent directive to the CVOs of public sector banks.

“As such, officials should not be retained in the same place/position for unduly long periods in the guise of indispensability etc. by the Management of Public Sector Banks,” it said while directing the banks to “specifically mention the action taken report indicating the number of officials rotated/transferred in the Bank in the monthly report of CVOs to the Commission“.

The move assume significance as the CVC while dealing with a case pertaining to a public sector bank recently noticed that a high ranking official, who was associated with procurements etc, was posted in the department for an unduly long period which is against the spirit of the Commission’s guidelines.

CVC officials said that its directive also stands for central government departments and public sector units.

According to the probity watchdog’s latest monthly report for October 2011, major penalty was recommended against 53 officials of the public sector banks including Syndicate Bank, Canara Bank and Punjab National bank for their alleged involvement in corrupt practices.

7 PSU banks, LIC, IICL to partner to boost infrastructure projects

India's top seven public sector banks, Life Insurance Corporation of India, and India Infrastructure Company Ltd are planning to join forces to give a fillip to large infrastructure projects.

State Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank, Bank of India, Union Bank of India and IDBI Bank, the country's largest life insurance company (LIC) and the Government-owned non-banking finance company (IIFCL) are working out the modalities of undertaking joint appraisal and co-financing of infrastructure projects.

This consortium of nine State-owned financial intermediaries will constitute a committee of senior officials to consider the viability of large infrastructure projects (entailing a capital expenditure of Rs 1,000 crore or more).

Pact for financing modalities

A memorandum of understanding to formalise the joint infrastructure project financing arrangement is in the works.

The move to stitch together a grand alliance to put big infrastructure project proposals on the fast track comes at a time when inadequate infrastructure in segments such as roads, ports, airports, railways, power, oil and gas pipelines, irrigation, and water supply and sanitation is proving to be a constraint on growth, say bankers.

“Currently, a project developer or his debt arranger has to go to each bank and financial institution to get his project vetted and get loan sanctioned.

Hence, it takes a long time to achieve financial closure.

This delays commencement of the project.

Single point of contact

“Once this consortium of banks, LIC and IIFCL begins joint operations, project developers can look forward to a single point of contact for loan appraisal and sanction. So, projects can be quick off the blocks,” said a senior executive with a State-owned bank.

The combined balance-sheet strength of the above mentioned entities will ensure that large viable infrastructure projects will be fast-tracked.

Besides interest income, they can also earn a decent fee income.

Currently, the project developer pays fee to debt arrangers for helping tie up funds.

According to the Planning Commission's Draft Approach Paper for the 12th Plan (2012-2017), special attention needs to be paid to the financing needs of private sector investment in infrastructure.

The Paper has assessed that infrastructure investment will need to increase from about eight per cent of gross domestic product in the base year (2011-12) of the Plan to about 10 per cent of GDP in 2016-17.

Investment in infrastructure

The total investment in infrastructure would have to be over $1 trillion (Rs 53 lakh crore at the current exchange rate) during the 12th Plan.

A significant part of the supportive framework to enable manufacturing to expand rapidly in line with both domestic and overseas demand is the rolling out of adequate physical infrastructure support including electric power, railways, roads and ports, the Paper said.

According to the latest Reserve Bank of India data, infrastructure credit accounted for 14.11 per cent (or Rs 5,79,968 crore) of the non-food credit of Rs 41,10,331 crore as on November 18, 2011.

kram@thehindu.co.in

Government to interview executive directors for bank CMD post on January 12

MUMBAI: The appointments committee is slated to interview candidates for the CMD post at government owned banks on January 12. Earlier the interviews were fixed on January 4.

The appointment's committee includes D K Mittal, secretary, department of financial services and deputy governor of Reserve Bank of India Anand Sinha among others.

Ten executive directors of public sector banks will be considered for CMD post at six banks.

These candidates include S.S. Mundra from Union Bank of India, R V Iyer and Rajiv Dubey from Central Bank of India, Ashwini Kumar of Corporation Bank, Archana Bhargava from Canara Bank, V Kannan from Oriental bank of Commerce, Rajeev Rishi from Indian Bank, Rakesh Sethi from Punjab National Bank A K Datt of Dena Bank and Ms Subhalakshmi Panse of Vijaya Bank.

The candidates are being selected to fill vacancies in fiscal year 2012-13 in Bank of Baroda, Bank of India, Canara Bank, Dena Bank, Allahabad Bank and United Bank of India.

Sources from the industry say that on January 13 the appointments committee will interview 42 general managers for the executive directors post.

Source: EconomicTimes

SBI, 14 other banks to get Rs 16k-cr funds by March

About two months after the Moody’s downgraded outlook on Indian banks on concerns over asset quality, the finance ministry has proposed to infuse Rs 15,000-16,000 crore in about 15 public sector banks by March 31, 2012. More than one-third of this amount (Rs 6,000 crore) is likely to go to the country’s largest lender, State Bank of India, while the demand for most other banks is less than Rs 1,000 crore each. SBI saw its financial strength rating cut by Moody's earlier this fiscal.

Those who are not likely to get capital infustion include Canara Bank and Central Bank of India.

To shore up the capital base of public sector banks amid rising bad loans, the Department of Financial Services, is seeking an additional Rs 10,000 crore in the third supplementary demand for grants to be tabled in the Budget session of Parliament in February, which might further distrub the fiscal consolidation story. The Budget had provided for Rs 6,000 crore for bank recapitalisation in 2011-12 and nothing from this has been given to banks yet. “We need to strengthen the capital base of our banks at a time when non-performing assets (NPAs) are rising. Almost all banks will be recapitalised, including those which have a tier I capital (core capital including equity and disclosed reserves) of 8 per cent and above,” said a finance ministry official.

The department has written to the banks asking them to take all necessary approvals and be prepared for capital infusion after Parliament’s approval is received by the end of the financial year.

However, another official in the Department of Economic Affairs, which will sanction the requirements, said a final decision on actual requirement of banks this year would be taken after looking at the capital adequacy ratio (CAR) and tier I of the banks at the end of quarter ending December 31, 2011.

CAR or a ratio of bank’s capital to its risks signifies a bank’s health. The higher the CAR, the better is the financial condition of the bank. Finance Minister Pranab Mukherjee has repeatedly said that the government was committed to 8 per cent Tier I capital, core measure of a bank’s financial strength, in all public sector banks by March 2012.

Another official said since the government’s fiscal situation was tight only those banks would be capitalized which have a tier I of 8 per cent or lower in December-end.

Globally the tier I requirement is only 4 per cent, but in India the regulator has fixed it at 6 per cent and the government wants it higher at 8 per cent to provide adequate buffer. For CAR, the regulatory requirement is 9 per cent, but the government wants it above 12 per cent.

The Planning commission has already given its approval for a Plan allocation of Rs 14,000 crore for bank recapitalisation this year. Last year also the government had infused over Rs 20,000 crore in banks.

Meanwhile, a committee headed by Finance Secretary Rs Gujral, has assessed the capital infusion needs of state-run banks over the next 10 years. The report, awaiting the approval of the finance minister, is expected to be released next month. The panel may suggest a holding company structure which can raise money globally to meet the capital requirements of banks. However, the government would not take that route to infuse capital this year since there is very little time left.

Capital infusion became critical for Indian banks after Moody's downgraded outlook on the banks to 'negative' from 'stable' over concerns that domestic monetary tightening and a potential global economic crisis would severely affect their profitability and asset quality. NPAs rose 34 per cent in July-Sep 2011. It had also lowered SBI's financial strength rating in view of its deteriorating asset quality.

SBI was earlier planning to come up with a right issue of Rs 20,000 crore, but the government was not willing to subscribe to the issue given its fiscal situation. The Centre's fiscal deficit has already toched 6.7 per cent of GDP in the first half of this fiscal. For the first seven months, fiscal deficit stood at over 74 per cent of the Budget target for the entire 2011-12. The target is to rein in fiscal deficit to 4.6 per cent of GDP in this financial year against 4.7 per cent in the last fiscal.

Source: Business Standard

Govt to interview 10 EDs for banks CMD post on January 4

MUMBAI: The appointments committee will interview executive directors of ten public sector banks on January 4, 2012 for CMD post in six banks.

The ten candidates called for the interview include S.S. Mundra from Union Bank of India, R V Iyer and Rajiv Dubey from Central Bank of India, Ashwini Kumar of Corporation Bank, Archana Bhargava from Canara Bank, V Kannan from Oriental bank of Commerce, Ravi Chatterjee from Syndicate Bank, Rajeev Rishi from Indian Bank, Ashwani Kumar from Corporation Bank and Rakesh Sethi from Punjab National Bank.

The candidates are being selected to fill vacancies in fiscal year 2012-13 in Bank of Baroda, Bank of India, Canara Bank, Dena Bank, Allahabad Bank and United bank of India.

Meanwhile, the government has yet to issue notification for the post of executive director in bank like Indian Overseas Bank and Andhra Bank, Even as the candidates names have been cleared.

Source: EconomicTimes

Government clears creation of new ED slot in public sector banks

KOLKATA: Large state-run lenders like Bank of Baroda and Punjab National Bank will get a third executive director (ED) on their board from next April, while smaller banks like Dena or United Bank will get their second ED.

The government has just cleared the Khandelwal Committee's recommendation to this end, two chief executives at state-run banks said. Banks with more than Rs 3 lakh crore business are considered as large entities.

The government has created the new slot in six large banks and said the third executive directors will be responsible for human resource development and technology.

Bank of India, Canara Bank, Central Bank of India and Union Bank of India are dubbed as large banks and will benefit from this move. This is in step with the director-HR position that exists in public sector undertakings like ONGC, Indian Oil, HPCL or BPCL.

"Creation of the ED position for HRD is an important step in the banking industry as this will help in bringing human resource development under board's direct attention," said AK Khandelwal, who headed the HR reform panel and submitted a series of recommendations in June 2010.

The government has also created a second executive director's position in five small banks having a business of less than Rs 1.5 lakh crore. Bank of Maharashtra, Dena Bank, Punjab & Sind Bank, United Bank of India and Vijaya Bank fall in this category and their second ED will also be responsible for HRD and technology. All these banks have one ED at their top deck at present.

Source: EconomicTimes

Canara Bank net slips 15% on rise in NPAs

A spurt in non-performing assets ( NPAs) due to 100 per cent implementation of system-based NPA identification caused a 15 per cent dent in Canara Bank's net profit for the second quarter of this fiscal. The bank's net profit stood at Rs 852.22 crore compared with Rs 1,007.88 crore recorded during the corresponding quarter of last fiscal.

“A major cleaning exercise was done comfortably and comprehensively. We are now in a position to produce much better results in the next two quarters, as we would not have the weight of hidden NPAs in smaller accounts,” said Mr S. Raman, Chairman and Managing Director, Canara Bank.

Though the bank made cash recoveries of Rs 808 crore during the quarter, it added net NPAs of Rs 187 crore too. This year so far, the bank's slippages are at Rs 2,500 crore, and “we are confident NPA slippages will not be much different from the last year despite smaller accounts coming into NPAs,” he said. The bank hopes to recover over Rs 3,000 crore this fiscal.

The net interest income of the bank was also marginally down due to reversal of income of Rs 120 crore during the quarter.

The banking system is witnessing a “silent liquidity overhang” due to which net interest margins are under pressure, Mr Raman pointed out. “The NIM scenario was a lot different over the last fiscal. In June, our NIM was 2.42 per cent, and now it is 2.64 per cent. We hope to substantially improve our NIM in the next two quarters, and our target is 2.75-2.8 per cent for the fiscal,” he said.

High savings deposit rate likely to dent banks' profits

Fears of banks’ earnings plummeting in a deregulated savings deposit rate regime appear to have gripped investors, with most analysts hinting that profitability may come under pressure due to higher cost of funds amid slowing growth in advances.

“The rise in the savings deposit rate will increase pressures on banks’ profitability,” Suman Chowdhury, head of Crisil Ratings, said.

The rating agency expects the lenders’ return on asset ratio to shrink by five basis points (bps) because of higher savings deposit rate, even if banks increase their transaction and service charges on such deposits.

The Reserve Bank of India yesterday allowed banks to decide on their own the interest rate on savings deposits. The central bank, however, asked banks to pay a uniform rate on savings deposits up to Rs 100,000 irrespective of the amount in the account.

Lenders may offer differential rates on deposits above Rs 100,000, but there should not be any discrimination between customers on interest rates for similar deposit amounts. Banks have been paying four per cent interest on savings deposits.

The move was not well received by investors, as bank shares plunged yesterday in an otherwise strong broader market. The 12-share Bank Nifty closed 1.41 per cent down, though the benchmark 50-share S&P CNX Nifty ended 1.83 per cent higher.

“We think this is a positive move for the economy, even though it is a negative for banks, as it will increase their funding costs,” Tushar Poddar and Prakriti Shukla, economists with Goldman Sachs, said in a note.

Economists and analysts fear in the short term, the deregulation may lead to a rate war, with small and medium-sized banks looking to strengthen their retail deposit bases will hike their savings deposit rates aggressively.

It took no time for YES Bank, the youngest lender in the country, to increase its savings deposit rate by 200 bps to six per cent. The private lender’s share of low-cost deposit was only 11 per cent at the end of September.

Other lenders such as IDBI Bank, Canara Bank, Bank of India, Federal Bank and Union Bank of India that have relatively lower share of the savings deposit base, are expected to raise rates soon.

“This change (deregulation of the savings deposit rate) is likely to result in an upward pressure on the deposit and interest rate trajectory in the near term, given the ongoing tightness in liquidity,” Siddhartha Sanyal, chief economist of Barclays Capital in India, said.

Industry experts said some bank stocks that were enjoying a premium over their peers because of strong retail deposit base, may be re-rated.

SMC Global Securities estimates if the savings deposit rate rises by 100 bps, banks profitability could be reduced by 12.9 per cent. “In the short term, it can be said the deregulation of interest rates on savings accounts is a real game-changer,” Jagannadham Thunuguntla, strategist and head of research at SMC, said.

Source: Business Standard

SBI, Central Bank, Syndicate, Canara extend home loan tenor upto 30 years as rate hikes bite hard

MUMBAI: After goading by the Government and fearing risks to asset quality, a number of state-run banks, led by SBI, Central Bank, Syndicate and Canara, have decided to raise home loan tenors to 25 to 30 years or till the borrower touches 70, well past the working age.

State Bank of India took the lead and has reportedly decided to extend the tenor of home loans by 10 years or up to 30 years, while others are doing this on request.

"We have decided to increase the home loan tenure by up to 10 years to 30 years and up to the age of 70, depending on the customer profile. Our Managing Director (S Krishna Kumar), is likely to announce this tomorrow," a senior SBI official told PTI, requesting anonymity. Kumar, who heads the national banking vertical at SBI, could not be reached for comments.

Fearing more bad loans in the system as interest kept on rising following tight monetary policy being under taken by RBI, the Finance Ministry had recently written to the public sector banks (PSBs) to increase the loan tenor instead of increasing the monthly repayment (EMI) amount.

However, all the banks that PTI contacted for reaction on the issue, said this guideline has been in existence for many years now and they had been implementing it on case to case basis. Over the past 19 months, RBI has increased interest rate by 325 basis points (one basis point is one-hundredth of a percent) to 8.25 per cent to batten down stubbornly high inflation, which stood at 9.72 per cent in September.

Generally, home loans are scheduled for 20 years and in some cases up to 25 years, if the borrower will not be retiring by then at 65. Typically on an average, a 25 bps spike in interest rate can push up EMI for a 20-year loan by Rs 17 per lakh. With regular hikes by RBI, EMIs have been stretched too far.

The RBI has hiked policy rates by 325 basis points since March 2010, following which most banks have raised lending rates by up to 250-300 bps making loans dearer. Central Bank of India Chairman and Managing Director M V Tanksale, too, said his bank is open to requests from the borrowers over increasing loan tenors.

"The important question is the cash flow of the borrower, if it increases, he/she does not require an increase and vice versa. I think this has been a very proactive step on the part of the government to issue such a directive."

When contacted the Mangalore-based Syndicate Bank Chairman and Managing Director B Seth said, "we have always been giving this option to our customers, even before the Ministry's letter. The whole point is to keep our asset quality and we offer such options to customers on request."

Source: EconomicTimes

Canara Bank slashes rates for housing loans by 50 bps

Bangalore: Canara Bank announced a retail loan festival from today till January 15 during which interest rates on housing and home improvement loans will be reduced by 50 basis points across all slabs and tenures.

The bank has also completely waived processing charges during this festival period, it said in a statement. It has also waived the 25 basis points additional interest being levied on borrowers acquiring a second residential unit.

In respect of vehicle loans availed during the period, borrowers need to pay reduced rate of interest by 100 basis points, besides being eligible for complete waiver of processing charges, the bank said in a statement.

Source: Financial Express

Bad loans to hit banks' Q2 nos

MUMBAI A fully-automated system of bad loan calculation may reflect a spike in non-performing assets (NPAs) of banks and weigh on profitability in the second quarter, industry experts said. The finance ministry has asked all state-run banks to fully computerise calculation of stressed loans by September 2011.

Until now, lenders calculated bad loans manually. This may result in higher bad loans and force the lenders, already pressured by poor credit demand and rising yields on treasury portfolio, to set aside a greater portion of profits as provisions. Banking analysts said, in the second quarter, banks will either show higher slippages when an account moves from standard category to sub-standard category or report reversal of interest income due to automation.

Banks, such as the State Bank of India and Bank of Baroda, have already incorporated this system for all their accounts as on June 2011. Other banks, including Bank of India and Union Bank, have adopted it only for those accounts where the customer has borrowed above Rs 5 lakh, while Central Bank of India had not started this process by the end of the first quarter. "All efforts are being made by the bank to move towards a fully-automated system of arriving at NPA numbers on automated basis.

We have set up a full-fledged team for the same," said Central Bank of India executive director RV Iyer. Among others, Canara Bank has shifted accounts of more than Rs 2 lakh and Punjab National Bank has shifted accounts above Rs 10 lakh to the automated system.

"By the end of second quarter, we will be calculating bad loans on a fully-automated basis without any human intervention. To negate the impact of possible increase in NPAs, we are focusing aggressively on recovery of bad loans, especially smaller ones, by holding recovery camps which have yielded good results," said Punjab National Bank chairman and managing director KR Kamath.

In the first quarter, several lenders had to reverse interest income on adopting automated system of loan calculation. This means that in the past, banks had booked income which they had not actually received and the same was reversed.

For instance, Canara Bank reversed Rs 210 crore of interest income, while Bank of India reversed Rs 175 crore in the quarter ended June 2011. Both banks had computerised only a part of their accounts in the first quarter and thus the pain would be felt in the second quarter as well when all accounts are computerised.

Source: Economic Times

Repo rate, reverse repo rate hiked: No immediate plans by HDFC, Canara Bank & Central Bank of India to pass hike to consumers

Though the Reserve Bank of India increased its policy lending rate for the 12th time in 18 months in its ongoing fight against inflation, most large lenders do not have immediate plans to toe the lines of the central bank in hiking their lending and deposit rates.

This is the first time in the past one year that top Indian lenders appear to be adopting a different stance and hold rates steady, despite the central bank's continued hawkishness.

Between July 2010 and August 2011, RBI raised repo rate by 250 basis points to 8%. During the same period, the State Bank of India, the country's largest lender, raised its base rate or the minimum lending rate by the same quantum to 10% from 7.50%.

"We do not see a possibility of rate hike based on this policy. But going forward, we cannot rule out another hike in rates. But, that probably will be the last hike," HDFC MD and CEO Keki Mistry told ET.

On Friday, RBI raised its key lending rate, or repo rate, by 25 basis points to 8.25%. The reverse repo rate, which is linked to the repo and 100 bps lower, is up at 7.25%.

"We do not think the banking sector will look at transmission of policy rates immediately. There is ample liquidity in the system, preventing banks from hiking deposit rates, and if we are not raising deposit rates, there is no justification to raise lending rates. Also, whatever little demand exists for loans will get affected if banks raise rates now," said Central Bank of India CMD MV Tanksale.

Canara Bank CMD S Raman said: "The trigger to raise lending rates will depend on accretion of deposits. Since credit growth has not been great, there is no pressure to raise rates. So, the rate hike may not be swift. I think we are almost at the peak."

Source: Economic Times

Banks find it tough to hike loan term

NEW DELHI: Public sector banks are finding it tough to increase the tenure of housing loans to soften the impact of repeated increase in interest rates, despite the finance ministry advising banks to keep the equated monthly instalments constant.

Bankers said as far as possible they were trying to increase the tenure but in a majority of cases the extended term of the home loan was exceeding the working life of the borrower. Canara Bank chairman and managing director S Raman said in most cases the lender was extending the term to 65 years.

Asked about what SBI was doing, chairman Pratip Choudhuri said that the country's largest bank was analysing the government's circular as the lender was itself trying to ensure that borrowers were not impacted. "We are trying to see how we can implement (the circular ) for loans which are security based such as housing loans," said SBI managing director A Krishna Kumar.

In most cases, banks, apart from factoring in the maximum tenure of 20 years, have also linked loans to the working age, which is 60 years for most banks. Following the government advisory, this has been raised to 65 years.

For banks it makes sense to increase the tenure since the interest income goes up. For someone who had borrowed Rs 50 lakh at 9% for 20 years, the EMI worked out to Rs 44,985. But with rates rising to 10.5% or thereabouts, the instalment, keeping the tenure constant, now works out to Rs 49,919 a month, which represents an increase of 11% in a span of 15 months or so.

If the borrower wants to retain the EMI at Rs 44,985, the only option he has is to increase the tenure to 413 instalments or 34-and-a-half years, which most banks are unlikely to provide. Apart from everything else, it would roughly equal the working life of most borrowers.

But with the government advisory, banks would be more amenable to increase the term though not to over 34 years. The flip side is that the interest burden, which would have been around Rs 58 lakh with a 240-month term, would rise to Rs 1.36 crore if the tenure goes up to 34 years.

Source: Economic Times