Chairman of the largest lender of the country, State Bank of India, Mr O P Bhatt has defended the teaser loan scheme offered by his bank to be completely valid and free from risk for system, bank and customers.

Terming these loans to be risky, Reserve Bank of India had asked banks to increase provisioning on such loans from 0.4% to 2%. Bhatt refused to accept the increased provisioning norms stating that the scheme is totally transparent.

He said that if revised provisioning norms are accepted, then the bank's share prices and profits would be affected.

"Almost 80 per cent of these customers took loans of less than Rs 10 lakh. It is only the aam admi who takes such a loan," he said.

SBI has been the pioneer in launching these special loan schemes.