Teaser loans may soon evanish from the lending scenario of the Indian banking sector following the cautious approach being adopted by banks in loan disbursal mechanism.

With some banks agreeing to RBI's stand and putting off these loans, others have opted to wait and watch the proceedings.

RBI, in the recent monetary policy review raised provisioning on teaser loans as a discouraging step towards the continual of such loans. The provisioning has been increased to 2% from 0.4% earlier. Also all home loans have been given an upper ceiling of 80% of the value of property.

The scheme has been pulled off by public sector lender, Indian Bank. We have withdrawn the earlier scheme and introduced a new festival scheme which will offer home loans at 8.5 per cent fixed for the first five years and floating thereafter in order to avoid any sort of confusion in the minds of consumers," said Mr T. M. Bhasin, Chairman and Managing Director, Indian Bank.

Punjab National Bank has however opted to wait and watch the fate of these schemes, suggested Chairman and Managing Director, Mr K.R. Kamath. "We launched the scheme as a part of our festival bonanza for a brief period (August 1 - December 31); however, we are not aggressively pushing such loans at present. We plan to wait for the final guidelines from the central bank regarding such loans," Mr Kamath said.

SBI however is not in agreement with RBI in this regard. The chairman of the bank was recently found quoting the schemes as "best product and the most sought-after" in the market.

"Typically, a few percentage points difference in interest rates hardly determine the purchasing decision of a customer. This is more to do with the property prices, however, it will be difficult for us to withdraw the scheme if other key players do not do so," said Ms Renu Sud Karnad, Managing Director, HDFC Ltd.