The base rate coming into action from July would bring with it an end to the era of teaser loan schemes. The banks had launched these schemes last year for both home loan and car loans wherein the customers were provided loans at rates as low as 8%. The teaser loans were provided below the BPLR.

The country's largest lender State Bank of India was the pioneer in the teaser loan scheme. It came up with these special loans in February this year. It initially came up with special home loan scheme and later on brought in the special scheme for car loans too.

Many public sector banks followed suit and came up with these special schemes. While all other banks have stopped the scheme, SBI has extended it till April.

"SBI's schemes were a response to the excess liquidity that the bank had and a response to the unusual economic events that the country is going through. The new guidelines certainly have no room for these schemes or any Diwali or Dussera schemes as the rates will have to be passed on to the existing pool of the bank's customers," said a senior SBI official.

The base rate system would finally take its place in the banking system from 1st July 2010. The Banking Codes and Standards Board of India (BCSBI), backed by the RBI had receives many complaints from the customers regarding these teaser loans that these loans are only benefiting the new customers.

The base rate would bring about indiscriminate measures of lending for all. "Banks can now have schemes only if they pass on the benefits to all the customers, which is very unlikely," said a senior official from the BCSBI.