Indian Bank, IOB launch special drive for home loans

PTI, 3 Jan 2014

In an attempt to target prospective home buyers, public sector lenders – Indian Bank and Indian Overseas Bank are offering home loans at interest rates of 10.20 and 10.25 per cent, respectively.

“Indian Bank is offering home loans at 10.20 per cent across various slabs irrespective of the tenure for people looking forward to build homes,” the city-based bank said in a statement.

Similarly, Indian Overseas Bank, as part of targeting women customers, is offering housing loan at 10.25 per cent, irrespective of the tenure and loan amount under the banks’ Subha Gruha scheme.

For other borrowers, the interest rates have been fixed at 10.25 per cent for loans up to Rs 75 lakh and 10.50 per cent for loans above Rs 75 lakh, it said.

Both offers from the two banks are valid up to March 31, 2014, the statement added.

Kotak Bank slashes home loan rates by 0.25%

Mumbai, Dec 24, PTI

Private sector lender Kotak Mahindra today followed State Bank of India and mortgage major HDFC by announcing a rate cut of up to 0.25 per cent on their housing loans for a limited period.

Accordingly, new home loans under Rs 75 lakh will be available at 10.25 per cent per annum, down from the earlier 10.50 per cent, while ones above Rs 75 lakh will cost 10.75 per cent as against the earlier 10.90 per cent.

The reduced interest rates will be applicable till January 31.

“The rate cut is driven largely by the scenario in the market place, a reduction in our cost of funds and our expectations from the future,” its executive vice president and head of retail assets, Sumit Bali, said announcing the rate cut.

The move follows similar ones announced by the country’s largest lender State Bank of India and mortgage major HDFC over the past week, ever since the RBI decided on a status quo in its mid quarter policy review.

When asked about the impact on margins as a result of this move, he said the rise in volumes will help the bank hold on to the current margins.

ICICI Bank cuts home loan rates

Hindustan Times, 23 Dec 2013.

India’s largest private sector lender, ICICI Bank, has cut its home loan rates for new customers by 15 basis points or 0.15 percentage points, as a part of a special scheme. It will be valid till January 31, 2014.

Under the scheme, the bank will offer home loans up to Rs. 75 lakh at an interest rate of 10.25%, while loans above Rs. 75 lakh will be charged 10.50%, the bank said in a statement on its website.

The move comes shortly after India’s largest lender, State Bank of India, and private sector lender Housing Development Finance Corp (HDFC) reduced their home loan rates a few days ago.

SBI is charging an interest rate of 10.15% for all home loans up to Rs. 75 lakh and 10.30% for loans above Rs. 75 lakh. It also announced a further 5 basis points or 0.5 percentage point discount for women borrowers. The bank was earlier charging an interest rate of 10.30% for loans up to Rs. 30 lakh and 10.50% for loans above Rs. 30 lakh.

HDFC also announced a “winter bonanza” scheme – providing home loans up to Rs. 75 lakh at 10.25%.

The rate cuts come after the RBI’s surprise decision last week to hold its key interest rates in its mid-quarter monetary policy review on December 18.

The repo rate, or the rate at which RBI lends to banks, was left unchanged at 7.75%, as RBI governor Raghuram Rajan indicated that his focus may shift to the slowing growth in the economy.

Rajan also indicated that  the bank would act again if food inflation does not translate into a significant reduction in headline inflation in the next round of data.

Banks look at women to check home loan NPA

Kumud Das, TNN, 21 Dec 2013

INDORE: Females have outnumbered their male counterparts, while approaching banks and financial institutions for seeking home loans. The simple reason being the large incentives banks are offering the females. Facing with problem of mounting NPAs (non-performing assets), bankers feel that disbursing loans to women are always safe.

In Indore alone, NPA in home loan was at 8-9% as on September 30, compared to the mark of 5-6% prevailing during the corresponding period last year.

While the country’s largest lender State Bank of India (SBI) has brought down its interest rate to 10.15%, the effective rates in case of women borrowers has been further brought down by the lender to 10.10%. In case of the mortgage lender, LIC Housing Finance, the rates for women borrowers are already lower by 0.50%, when compared to their male borrowers, at 10.25%.

LIC Housing Finance (LICHF), which was the first to lower its interest rate for its women borrowers two years ago in the name of Bhagyalakshmi scheme, has projected the target of crossing the mark of Rs 500 crore by the end of the fiscal. Senior manager, LICHF in Indore, Pradeep Chakrabarty, said, “We have already achieved the mark of Rs 325 crore and we expect to take it to Rs 500 crore by March next year as against the mark of Rs 405 crore which had been achieved by us during the last fiscal”.

Lead district manager of Indore, Satish Sant, said, “There are two direct advantages having women as borrowers. First, they rarely change their residential address and secondly, they make sure that EMI was being paid in time”.

Branch manager of recently opened all women, Bharatiya Mahila Bank in Indore, A K Dubey, said, “We are also looking for more and more women borrowers to come forward for home loans. “

Talking to TOI, chairperson of SBI, Arundhati Bhattacharya, said, “We want to encourage more women to become co-borrowers for home loan. Secondly, we want to help women entrepreneurs overcome the problem of collaeral”.

Regional manager of Bank of Baroda, R K Soni, said, “More than 50% of our home loan borrowers do have women as co-borrowers and our total outstanding to the sector as of now stands at Rs 400 crore”.

CMD of National Housing Bank, R V Verma, said, “We have recently launched a refinance scheme for banks/mortgage lenders for women borrowers in which we charge interest rate less by 0.5-0.75%. The idea is to see making homemakers as home owners too.”

State Bank of India may cut new home loan rates by 15-25 bps

19 Dec 2013, ET Bureau.

MUMBAI: State Bank of India has decided to lower home loan rates for new borrowers and offer a special discount to women, in moves prompted by the Reserve Bank of India keeping policy rates unchanged on Wednesday contrary to expectations that they would be increased.

The country’s largest bank has decided to lower rates by 15-25 basis points (bps) and raised the borrowing limit for loans at the lowest rate. One basis point is one-hundredth of a percentage point.  are expected to kick in shortly.

“The reduction in the risk weightage and poor demand for loans has been the key reason for SBI to reduce rates,” said a senior SBI official.

Move may Help Realty Sector

The move might lead to a revival of interest in the real estate sector, which has been hit by high prices amid a sluggish economy

SBI will charge 10.15% on loans up to Rs 75 lakh and 10.30% on loan amounts higher than that. Women borrowers will get a further 5 bps off. Earlier, the bank charged 10.30% for loans up to Rs 30 lakh and 10.50% for loans above that level.
The move to lower rates and offer discounts to women comes as Housing Development Finance Corporation(HDFC), the country’s biggest mortgage company, did the opposite about two weeks ago. It raised rates by 10 bps to 10.5% for loans up to Rs 30 lakh ..

“The aim is to attract customers and improve market share,” said an SBI official who did not want to be named. The decision to reduce rates had been taken at a meeting of the high-level asset liability committee, he said. SBI has a home loan book of Rs 1,30,034 crore that comprises 13.6% of the bank’s loan book.

The move to raise the borrowing limit at the minimum rate to Rs 75 lakh from Rs 30 lakh comes after RBI changed its policy on risk weightage.

In June, RBI reduced risk weightage to 50 bps for home loans up to Rs 75 lakh, and 75 bps for loans above 75 lakh. Earlier, risk weightage was in three slabs – 50 bps for loans up to Rs 30 lakh, 75 bps for loans up 75 lakh and 125 bps for loans above Rs 75 lakh

ICICI Bank’s special festive offers for NRIs

Mumbai, Oct. 22:

ICICI Bank, India’s largest private sector bank, is offering flat processing fees on home loan to its Non-Resident Indian (NRIs) customers for the festive season.

The bank will charge a processing fee of Rs 5,000 on home loans up to Rs 75 lakh and Rs 10,000 on home loans above Rs 75 lakh, this up to October 31, 2013.

On loans below Rs 10 lakh, ICICI bank will charge a processing fee of 0.5 per cent on the loan amount. The bank also has a referral arrangement with ICICI Home Finance Co Ltd which provides property search facility in India.

Further, the private lender has also partnered with Thyrocare Technologies to give discounts on health check-ups offering 77 medical tests worth Rs 5,000 for Rs 1,500 for its NRI customers and their family members, the bank said.

Moreover, the bank’s NRI customers will get preferential rates on foreign currency conversion and a ‘no minimum balance savings accounts’ to resident family members of NRI customers

Rajiv Sabharwal, Executive Director, ICICI Bank, said, “These offers have been designed based on customer insights derived from serving 1.5 million NRI customers across more than 150 countries and processing over 2 lakh NRI transactions monthly.”

Syndicate Bank cuts interest rate on vehicle, consumer durable loans

Bangalore, Oct 22:  Business Line
Syndicate Bank has slashed the interest rate on vehicle loans, consumer durable loans and light and heavy commercial vehicle loans.

To commemorate its Foundation Day, the bank is offering home loans at 10.25 per cent (base rate) for both the existing and new borrowers irrespective of the loan amount.

Interest rate on two-wheeler loans for home loan borrowers has been reduced from 12.25 per cent to 11.5 per cent (base rate + 1.25 per cent). For others, it is 12 per cent (base rate + 1.75 per cent).

Interest rate on four-wheeler loans for home loan borrowers has been brought down from 10.9 per cent to 10.4 per cent (base rate + 0.15 per cent). Other borrowers will be charged at 10.75 per cent (base rate + 0.50 per cent).

Interest rate on loans to consumer durables has been brought down from 15 per cent to 11.75 per cent (base rate + 1.5 per cent) for home loan borrowers. For others, it is 12.75 per cent (base rate + 2.50 per cent).

Interest rate on loans to light and heavy commercial vehicles has also been brought down from 12.75 per cent to 11.5 per cent.

SBI hikes base rate by 10 bps to 9.80%, still the lowest in the industry

Sep 20, 2013, ET Bureau.

MUMBAI: State Bank of India (SBI) has hiked lending rates wherein new borrowers will have to pay more as compared to existing borrowers. SBI hiked base rate by 10 basis points to 9.80% a day before the Reserve Bank of India’s new governor, Raghuram Rajan is slated to announce his first mid quarter policy statement.

Interestingly for the first time existing borrowers are spared from a steep hike. New home loan borrowers of SBI will have to pay 10.05% for home loans for loans upto Rs 30 lakhs while the existing home loan customers will be charged 10%. For home loans between Rs 30 lakhs to Rs 75 lakhs, new customers will be charged 10.30% while existing customers will be charged 10.20%.

SBI is the first government owned bank to raise rates after RBI started tightening liquidity to protect the rupee from weakening in mid July. Following this, SBI and HDFC Bank offers lowest lending rate at 9.80%.

The difference in rates between existing and new customers is mainly because the bank has hiked spread or mark-up on base rate for new customers. The bank has increase mark up for home loans upto Rs 30 lakhs from 25 bps to 30 bps while the mark up for loans between Rs 30 to Rs 75 lakhs is raised from 40 bps to 50 bps.

Officials from the bank said that the bank has raised rates since the cost of money has gone up in the recent weeks. On Thursday, SBI bank also announced a hike in retail deposits in the range of 25 to 100 basis points. The bank would offer 100 bps higher for 179 days and one-year deposit at 7.50%. Early this month, the bank had raised interest rates on short-term bulk deposits to 9% from 7.25%.

SBI has also raised spreads on base rate for corporate loans. Officials from the bank who did not want to be named said that mark-up on base rate for top rated corporate is raised by 15 bps to 105 bps.

Several private banks such as HDFC Bank and ICICI Bank had announced a hike in lending rates after RBI tighten liquidity to prevent rupee from weakening against dollar. Among others HDFC and LIC Housing Finance, the housing finance companies also raised lending rates.

Among PSU banks, Andhra Bank, Union Bank of India and Bank of India had rolled back the reduction in rates to 10.25% in recent weeks. These banks had cut rates at the instance of FM days before RBI began tightening liquidity.

RBI ups repo rate by 25 bps; markets in free fall

Mumbai, Sept 20:  The Hindu Business Line

In his first credit policy since taking over earlier this month, the RBI Governor, Raghuram Rajan, has hiked the key policy repo rate.

The RBI has increased the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.25 per cent to 7.5 per cent with immediate effect.

It has also reduced the marginal standing facility (MSF) rate by 75 basis points from 10.25 per cent to 9.5 per cent with immediate effect. MSF is the rate at which banks borrow from the central bank.

The RBI has reduced the minimum daily maintenance of the cash reserve ratio (CRR) from 99 per cent of the requirement to 95 per cent effective from the fortnight beginning September 21, 2013, while keeping the CRR unchanged at 4.0 per cent.

Consequently, the reverse repo rate under the LAF stands adjusted to 6.5 per cent and the Bank Rate stands reduced to 9.5 per cent with immediate effect. With these changes, the MSF rate and the Bank Rate are recalibrated to 200 basis points above the repo rate.

“The need to anchor inflation and inflation expectations has to be set against the fragile state of the industrial sector and urban demand. Keeping all this in view, bringing down inflation to more tolerable levels warrants raising the repo rate by 25 basis points immediately,” RBI Governor, Raghuram Rajan, said in the mid-quarter policy review statement.

Highlights of the monetary policy review

Stock markets reacted negatively to the policy announcement. The Bombay Stock Exchange’s sensitive index Sensex dropped nearly 500 points to a level of 20,155 points at 11.30 a.m, minutes after the announcement. Except software majors – TCS, Wipro, Infosys and pharma major Sun Pharma,which were flat, all other constituents of the index were in the red.

The rupee opened at 62.04, moved up slightly to 61.88 before reversing and trading at 62.38 to the dollar at 11.32 a.m.

Cautious unwinding of exceptional measures

Explaining the rationale for its moves, the RBI said in a statement that it had earlier taken a number of exceptional measures to tighten liquidity with a view to dampening volatility in the foreign exchange market. These had the impact of raising the effective policy rate to 10.25 per cent, and were intended to maintain tight liquidity conditions till there was improved prospects of stable funding took efect. With the improvement in the external environment, the RBI is now in a position to contemplate easing these measures, it said.

Inflation high

Conceding that “inflation is high and household financial savings is lower than desirable”, the RBI hopes that a better harvest and negative output gap will help offset the consequences of the currency depreciation and inflation.

Costlier food items sent wholesale price inflation to a six-month high of 6.1 per cent in August.

Growth trailing

Stating that economic growth has weakened with continuing sluggishness in industrial activity and services, the RBI said the pace of infrastructure project completion is subdued and the start of new projects remains muted.

“Consequently, growth is trailing below potential and the output gap is widening. Some pick-up is expected on account of the brightening prospects for agriculture due to kharif output and the upturn in exports,” it said.

Rajan said concerns on the current account deficit have been mitigated by steps taken by the government and the RBI.

Also, steps have been taken to improve the environment for external financing, turning the focus to internal determinants of the value of the rupee, primarily the fiscal deficit and domestic inflation, he said.

“Further actions need not be announced only on policy dates. However, any further change in the minimum daily maintenance of the CRR is not contemplated,” he added.

NHB caps home loan rates at 10.75% for weaker sections

ET Bureau, 12 Sep 2013

KOLKATA: The National Housing Bank has capped lending rates for specialist mortgage lenders such as LIC Housing Finance which seek refinance from it.

The move comes when interest rates are climbing and the government may have pushed it with an eye on elections as in the case of the Food Bill and accelerated direct cash transfers.

The housing finance regulator has capped lending rates at 10.75% on home loans for the economically weaker sections. This cap is applicable to specialised housing finance companies, while banks will lend at base rate to the targeted segment.

Borrowers with a household income of less than Rs 4 lakh will get the benefit of interest rate ceiling under the government’s dedicated urban and rural housing schemes. NHB said it will provide refinance at a subsidised 8.25-8.75% rate to lenders, so that they earn 200-250-bps interest spread.

Normally, NHB provides refinance at 9.8-10% rate of interest. “The idea behind the interest rate ceiling is to pass on the benefit of concessional funding to ultimate borrowers,” NHB chairman and managing director RV Verma told ET. He said the ceiling was finalised after taking inputs from the government and the Reserve Bank of India.

“Lenders will get good enough spread to give the scheme a fair trial,” Verma said. NHB will send a note to all lenders about this cap later this week. However, lenders will be free to charge any rate if they don’t take refinance from NHB.

“The spread is not enough, taking into account the risk factor attached in funding to economically weaker section,” said DHFL Vysya Housing Finance managing director R Nambirajan. “We will make a request to NHB to increase the spread to at least 3% to cover higher risks,” he said. SBI too may not gain from this move.