I took a home loan from ICICI Bank in 2007 July the floating rate of interest was 12% at that time now the floating rate is 10.5% but till now the bank has not reduced the rate for existing customers are you not confused what is the meaning of a floating rate?
No you need to be finance specialist. I visited the customer service centre of the bank and asked them for the reason. Some financial terminologies were explained to me. When I took the loan the FRR (Floating Reference Rate) was 12.75% and I was given a margin of 0.75%.
Now the bank has increased the margin for it’s new customers but not reduced the benchmark PLR.Hence the interest rate for my case will remain same unless I pay further Rs.18000 approx. The case would have been different had the rate been increased.
Do you now understand what floating rate of interest is? It’s totally a bank’s discretion.