The largest lender of the country, State Bank of India has decided that its much disputed teaser home loan scheme will be extended for one more month till May 2011.

The scheme is a mix of fixed and floating rate home loans. According to a senior official of the bank, the interest rates associated with the loan will remain unchanged during the extension period.

The scheme has been so far extended many times since the bank had first implemented it in 2009. The scheme offers 8% interest to the borrower in the first year of the loan, the second and third years attract interest of 9% while from the fourth year onwards, the interest is a floating one based on the prevailing rates at that time.

"The scheme will be offered till the monetary policy review of RBI or till the bank reviews its annual accounts, whichever is earlier," said a bank official.

Reserve Bank of India has so far not been happy with this scheme being offered by SBI to customers. The regulator had increased provisioning norms on such loans by as much as five times. Although SBI has requested the apex bank to waive off this provision, but if it does not, then the bank would have to make a provision of Rs 300 crore for this purpose, said OP Bhatt, erstwhile chairman of SBI who superannuated yesterday.