SBI chairman .P. Bhatt in Mumbai on Wednesday. (PTI)

Mumbai, March 30: Outgoing SBI chairman .P. Bhatt today said the RBI had “not understood” the bank’s teaser home loan scheme and contrary to the central bank’s belief, the SBI fully assessed the capacity of a borrower before offering such loans.

Speaking to reporters on the eve of his retirement, Bhatt, however, reiterated that the State Bank of India (SBI) would abide by any direction given by the banking regulator on special home loan offers.

In November, the Reserve Bank of India (RBI) raised the provisioning for teaser rate loans, which are standard assets, to 2 per cent from 0.4 per cent to hedge against default risks.

Under its special home loan scheme, the SBI offered a fixed 8 per cent interest rate in the first year followed by a floating rate over the remaining term of the loan.

The SBI had asked the RBI that it should be exempted from making this provision as it was not offering a teaser rate product.

For the third quarter ended December 2010, the SBI did not make any provision for such loans. Bhatt said the bank would provide for such loans if the RBI asked them to do so.

The RBI had raised the provisioning requirement for teaser rate products on the ground that banks often failed to assess in the loan appraisal stage whether a borrower had the capacity to repay at the higher rates in the subsequent years of the loan.

According to Bhatt, the SBI’s special home loan scheme was not a teaser rate product as borrowers were told about the EMIs they would have to pay and such loans were sanctioned after a proper assessment of the borrowers.

“Our loans are given on the basis of job or income, affordability, suitability and eligibility. Of course, they (RBI) have not understood,” he said.

Bhatt, during his five-year tenure at the helm of the SBI, has been praised for putting the bank on a rapid growth path through aggressive products such as the special home loan scheme and an emphasis on technology.

However, he also had disagreements with the RBI over various issues.

The successful banker, who retires tomorrow, said though his post-retirement plan was “still in the making”, he had received offers from a few organisations.

On his vision for the bank, Bhatt said the SBI not only progressed quantitavely but also qualitatively as it had become service focussed and would continue to do so. “What has happened during my time should be inflexion point for the bank,” he said.

On what he has achieved, Bhatt said the bank was using more technology whereby all non-performing assets could be mapped across the organisation.