New Advantage-5 not teaser loan,LICHF

8216;New Advantage-58217; offers fixed interest rates on home loans for the first five years and floating rates thereafter,which are linked to prevailing prime lending rates.

The National Housing Bank NHB had last year mandated the housing finance companies to make a higher provisioning of 2 per cent for the teaser loan schemes offered by them,on concerns that the loans could turn bad. This is much higher than the 0.4 per cent provisioning required for standard loans.

8220;The loans disbursed under New Advantage-5 are not under teaser schemes. We are literally after the NHB to get a clear mandate on teaser products,8221; Sharma said.

Fixed-cum-floating rate home loans were originally characterised as so-called teaser loans because of their ability to attract borrowers with a lower interest rate in the initial years.

Higher provisioning which means amount set aside to cover defaults,would lower profits of lenders,who are already grappling with the problem of rising bad loans on account of high interest rates.

During the September quarter LIC HF has reported a 58 per cent decline in net profit at Rs 98 crore.

The company attributed the decline in net profit to an additional provision of Rs 205 crore related to provisions on standard assets it made during the quarter as per a directive issued by NHB.

Shares of LIC HF closed at Rs 215.90,down 2.06 per cent on the BSE.