Thursday, February 19, 2009

HDFC Home Loan - Prepayment Penalty increased from 2% to 3%

SBI and other Public Sector Banks has given a real blow to its competitors. HDFC which is market leader in Home Loan segment cannot be seen more frustrated and terrified than these days. HDFC has done everything to fool the investor and the last straw is giving them financial blow in form of increase in prepayment charges.

This NBFC is real laughing stock in its own offices too. The visible shattered Mr. Deepak Parekh could not hide his frustration and blasted against SBI low rates in national channels. The frustration is now in open and people can see it much clearly than ever. HDFC did almost everything to attack the move by SBI

1) To start with its agents started a campaign telling prospects that how SBI loan is mere an eye wash based on amortization schedule. It did not worked.
2) Secondly they played with rates which SBI would charge after 1 year, which did not worked either because SBI rates historically has been much low compared to most of the banks.
3) Finally you could see its agent really begging to customer with no argument left on their side.

HDFC frustration is evident in recent days because enquiries has increased in its offices related to shifting of home loan. You would be lucky if you get an answer from them because it seems that they have sent all their customer care officials on a paid leave. Well atleast 4 mails and lots of bad words has not given me an answer about my principal and documents available with them.

The last ditch effort is to increase the prepayment penalty from 2% to 3% in case you are shifting loan to another Bank. Yes this has happened and HDFC did not cared to inform anyone. This is solely done to show how shifting loan would bring the whole transaction to a loss rather than a profit. Such a monopolistic attitude will be tolerated in India because rules merely don’t work here or are non-existant.

HDFC is very prompt and almost the first bank to increase the rate everytime they see an opportunity. But reverse is not true as they are never as eager to reduce them. So the plot here is that they will tell you the rate is 10.75% above 30 lakh loan. If your paper looks good and branch head see that you are eligible then you will get a call or sms saying that they have reduced rate to 10.5%. You would be happy to hear that but after 3 or 6 months your rates would be increased to all time high. Poor India fellas have no option but to live with it (now with penalty of 3%).

I think this rate war has some serious connotations which if studied clearly can help the strategist a lot. Few of them are
1) With low rate people have stormed to SBI for transferring their loan. Definitely there must be many credible people who would want to get away from clutches of greedy banks like HDFC. This is a clear loss of banks like HDFC because if the person application gets approved (SBI have stringent measures) than they would lose a good customer. So a drain of good portfolio of loans
2) Real Estate market can go up only when people who have bought house is given a capability to buy more. Yes they are risk taking individuals and know how to rotate money. If we can bring down rate of existing customers than it will give a real estate market a real push. These are the people who have seen the world, have gone through processes and understand how to play it. You cannot expect new customers in market when the market in itself look scary. Only people who can perform here is the seasoned ones.
3) If banks like HDFC did not bring its rate low for existing/new customer than their portfolio would soon tilt towards the bad ones. One might think that its thing of distant future but the seed has been sown. Today only those customers are coming to such banks who have been refused loan from banks like SBI.

I believe HDFC and other banks owe to India much more than anyone. They have bigger role to play in bringing economy back rather than thinking about their fat paychecks. Time has come for such banks to get in line otherwise the situation has a potential to embark a severe impact to its market share.

In last two weeks 3 of my friends have initiated discussion with SBI and are in last stage. The other two known people could not get response from HDFC due to their poor customer service or frankly “Vicious Tactics”.


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Anonymous said...

This right HDFC is all time high interest rates. All should make voice against this.

Anonymous said...

What is the present ROI for 25 lakh loan in HFDC for existing loan? I tried with their customer service but no response

uttam said...

All existing customer of HDFC. Join Following group to fight against HDFC's monopoly. Already 300 people are member. Get benifitted yourself bye lowering your existing interest rate

Anonymous said...
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Chilli Flakes said...
This comment has been removed by the author.
Anonymous said...

I took an NRE Home Loan of 24.5 lakhs fm hdfc,whose paperwork i beleive is faster than other public sector funds.However i am having quite a few complaints against it,namely
a)There is no online/net customer support.I had request of certain of my papers to be returned.However it took almost 1.5 month of continous calling,e-mails,messages.Finally i had to raise my voice to make them listen.They have system of writing complaints on their web site.
(a)There is no acknowledgement of complaint.Hence no generation of complaint number.If no acknowledgement,then any no. of mail you write you cant blame them as there is no record.No e-mail address is given on their website.Hence you cant send fm e-id.In conclusion no acknowlegement hence no accountability.
2)I wanted 24.5 lakhs of loan.But HDFC office wanted and persuaded me to get sanction of full 85% of flat value,which is about 26 lakhs.I have taken 24.5 lakhs of loan.Now
I went to thier office recently to ask why i am being charged 10% ROI when HDFC is saying it charges only 9% on paper/tv.They said you have to change their spread.My loan is PLR - 3.75%.Now they are offering loans at PLR - 4.25/4.75%.To change to new spread they charge you have to pay them again 0.5%/1.5% of your total loan amount,plus taxes.Very smart,why-
a)In one move they have penalised old customers by not changing their spread automatically and trying to catch new customers by changing spread.I thought spread doesnt change,PLR changes as per broad economy condtion.
b)By putting penalty on changing spread they are asking you to pay
almost the amount you are going to benefit by reduced interest rates.
c)They calculate this penaly on 0.5%/1.5% of your total sanctioned amount.Should it not be on balance principal.Infact i have to pay not on taken loan amount but rather sanctioned.Result to reduce rate to deserved 9%,i have to pay about Rs 40,000 and my EMI increases also i.e.i am paying about rs 55,000/mon now.After paying abt rs 40K,i have to pay couple of hundred rs extra also per month in EMI!!!what a calculation method.Loss par loss.What logic.Then they say customer is always right and always at loss!!

richu said...
This comment has been removed by the author.
SKP said...

My experience with HDFC has been quite different. They are friendly and quite transparent when it comes to assisting customers with various stuff. Customer services simply does not exist at SBI - leave alone on-line customer service, helpdesk etc. SBI is very arrogant and you don't want to go their second time. They make it appear as if they are doing a big favour by giving you a home loan. Those who expect to be treated like a respectable customer cannot stand SBI officers. After all we pay for their salaries! I did not go back to SBI - went straight to HDFC and got my loan in 10 days flat at the same EMI that SBI offered.

Bhooshan Kulkarni said...

This could be because are are new customer and hence you got a good rate. But the customers who already have loan for quiet some time are suffering by paying lot of interest.

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Anita Sharma said...

This is not a big deal that HDFC increased the penalty. The latest interest rates are quite cheap in all kinda of loan like HDFC Home Loan,auto loan etc. It all depends on person's eligibility and credit score that for what rates he can get the loan.

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