LIC HFL Floating Rate Plot Loan Interest Rate Not Reduced After Repo Rate Changes: Should I Be Worried?

Ans: You're absolutely right in expecting fairness when the repo rate goes down. Let me guide you step-by-step on what’s happening and what you can do next.

 

Understanding the Floating Rate Loan from LIC HFL

Your loan is linked to LIC HFL’s internal benchmark, not directly to RBI’s repo rate.

 

When RBI increases the repo rate, lenders are quick to increase your rate.

 

But when RBI reduces it, lenders often delay passing on the benefit.

 

This delay happens because LIC HFL’s Cost of Funds Based Lending Rate (COFBR) is not automatically updated.

 

COFBR is not as transparent or responsive as the external benchmark linked rates used by banks (like RLLR/EBLR).

 

Why LIC HFL May Not Reduce Your Rate Immediately

LIC HFL is an HFC (Housing Finance Company), not a bank.

 

They don’t follow the repo-linked lending rate (RLLR) system.

 

Their interest rates are based on internal policies and board decisions.

 

They may wait for quarterly reviews before passing on repo rate cuts.

 

Why the Communication Seems Delayed or Vague

You are told “waiting for CO update” – this is standard response.

 

In truth, they are buying time and not acting promptly.

 

Customers feel helpless because HFCs are not as strictly regulated as banks in this area.

 

What You Can Do Now: Action Steps

Write a formal email to the customer care, branch, and grievance officer. Request a clear explanation.

 

Ask them to share the latest COFBR and how your ROI is being calculated.

 

Use this format: “As a floating rate loan borrower, I am entitled to revised rate benefit. Kindly update my ROI in line with latest changes and share the effective date.”

 

If no proper response in 15 days, escalate it to NHB (National Housing Bank).

 

NHB is the regulator for HFCs like LIC HFL. You can file a complaint online.

 

Link: https://grids.nhbonline.org.in

 

Consider Switching the Loan to a Bank

If LIC HFL does not reduce rate, think of a loan balance transfer.

 

Switch to a repo-linked loan from a public or private sector bank.

 

These are directly linked to RBI’s repo rate. Very transparent.

 

You may have to pay small processing charges. But savings can be big.

 

Let a Certified Financial Planner help you calculate real benefit.

 

Check These Before Transferring

What’s the remaining tenure of your loan?

 

Is there any prepayment penalty? Usually none for floating loans.

 

Will new bank offer lower rate? Ask for a sanction letter before deciding.

 

Finally

LIC HFL may delay, but they cannot avoid revising your rate forever.

 

You are a responsible borrower. You deserve fair rate benefits too.

 

Keep your communication professional and written.

 

If they still delay, go ahead and move to a better lender.

 

Always have a Certified Financial Planner guide your debt and investments.

 

Best Regards,
 
K. Ramalingam, MBA, CFP,
 
Chief Financial Planner,
 
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment