Citibank Loan Against Property 
Interest Rates

Citibank has an illustrious history of offering banking services in India for more than a hundred years. The multinational bank commenced its operations in India by opening its first branch in the country in 1902. Since that day, the bank has offered a variety of banking products, including deposits and loans to its Indian customers. Amongst the loan products, the home loan and the personal loan are some of its most popular products. Citibank credit cards have a great deal of acceptability in India. The bank has an excellent product, Loan Against Property to provide asset-backed financial assistance to its customers.

Below are some attractive features of Citibank Loan Against Property:

• Loans against property are available to meet business and individuals requirements
• Individual's needs can be marriage, child's education, medical expenses, buying a new property, closing of existing debts, and so on.
• Business requirements can range from the purchase of machinery, meet urgent working capital needs, and so on.
• Loans up to 5 Crores are available against residential property
• The maximum loan can go up to 70% of the property value subject to satisfying income and repayment norms.
• Loans at attractive rates of interest linked to an external benchmark rate
• Flexible repayment tenure that can be as extended as 15 years
• Rate of interest better than the personal loan interest rate
• Simplified eligibility norms

With effect from April 01, 2016, banks switched over to the MCLR concept. The objective of introducing this concept was to link the bank's cost of funds to its retail lending rate. It entailed tying up with an external benchmark rate. Within a couple of years, RBI found out that banks were reluctant to pass on the benefits of market rate fluctuations to its customers. Therefore, Reserve Bank of India introduced a new concept whereby it advised banks to link with an external benchmark rate and alter the individual lending rates automatically.

The RBI offered the banks to choose any of the market-linked rates like the repo rates, Treasury Bill rates, and so on. It offered banks time up to October 2019 to switch over to the new lending rate structure. However, Citibank decided to link with the Treasury Bill (3M-T-Bill rate) with effect from January 24, 2018.

The Loan against the Mortgage lending rate is now linked to the 3M-T-Bill rate. Citibank adds its spread and arrives at the TBLR (Treasury Bill Linked Rate). Besides the loan against the mortgage, Citibank links its home loan interest rates with the TBLR.

This rate applies to loans with floating rates of interest alone. As on date, Citibank does not offer any fixed-rate loan product in home loans and loans against property.

As on February 12, 2020, the T-Bill-3M rate is 5.10%.

• For loans with Cash-out portion exceeding 100% of the home loan amount: Weighted average of the home loan grid rates and property power loans (Cash-out part).
• Loans <= 10% of the home loan: Home loan interest rates are applicable

The loan pricing depends on the following factors:

• The Loan amount
• The product type and facility
• Internal credit assessment of Citibank

The purpose of availing a Citibank Loan Against Property is to satisfy individual needs and emergency business requirements. The personal loan does the same, as well. However, both these loans are different in many aspects.

• The personal loan is comparatively small because the maximum amount one can apply does not generally cross 50 Lakhs. On the other hand, the Loan Against Property is available for amounts as significant as 5 Crores.
• The bank does not have any security to rely on for a default in the personal loan repayment. The Loan Against Property is a secured facility where the borrower creates an equitable mortgage in the bank's favour.
• The personal loan is a riskier proposition for the bank when compared to a Loan Against Property. Hence, the rate of interest applicable to a personal loan is higher in comparison. The loan against credit card is similar to the personal loan in this respect.
• The bank has to exercise greater caution when dealing with personal loans. Hence, the CIBIL score requirement for a personal loan is generally high.

Citibank Loan Against Property is a unique facility because it is similar to both the personal loan and the home loan. Purpose-wise, it is identical to the personal loan. Security-wise, the Loan Against Property is equal to a home loan. Nevertheless, there are individual distinctions between the two.

• The purpose of a home loan is to purchase or construct your house/flat. The Loan Against Property has an extended purpose. It is handy for satisfying all individual and business needs.
• Though the security for both the loans is an equitable mortgage of property, the LTV ratio in the case of a Loan Against Property is less in comparison.
• The rate of interest for a home loan is comparatively lower than the Loan Against Property
• The home loan is for the creation of an asset, whereas the Loan Against Property does not necessarily have any asset creation. Therefore, the bank demands collateral in the form of property.
• The home loan has a more extended tenure when compared to the Loan Against Property

• The T-Bill rate is a market-related reference rate
• This rate depicts the movement of the market forces accurately, thereby passing on the benefits of market rate fluctuations to the borrowers.
• FBIL announces this rate daily. Hence, it is an advanced rate structure when compared to the repo rate. Many banks follow the repo rate as a reference point for their retail loans.

• Though the rate fluctuates daily, Citibank announces its TBLR every month on a specific date between the 12th and the 15th of the month. This rate becomes the reference rate for the loans sanctioned during the intervening period.
• The TBLR reset happens every three months. Hence, the customer gets the benefit of market rate fluctuations every quarter. On the other hand, the repo rate-linked interest rate structure is better. The banks reset the rates at the start of the month following the date of announcement of the repo rate.