Month: October 2012

Home loans will grow 20% on rate cuts: National Housing Bank

24 Oct 2012, ET Bureau.

MUMBAI: Housing finance regulator National Housing Bank expects a growth of 20% in loans this fiscal, up from 17% in 2011-12, with lenders slashing rates and reducing other charges. Mortgage lending business has become competitive with state-run banks aggressively cutting rates and waiving processing fees, besides doing away with the pre-payment penalty, making it easier for borrowers to switch lenders.

“Some banks are very aggressive in terms of lowering of interest rates,” said NHB chairman and managing director RV Verma. “The lowering of base rates and abolition of some of the fees have made the whole environment competitive and, going forward, we do not rule out further price wars among the banks and HFCs (housing finance companies),” Verma said.

Banks have the benefit of lower cost of funds through strong deposit franchise, while HFCs are constrained by higher cost of funds as they borrow from banks and other sources. Verma, however, said the HFCs can succeed by offering personalised service.

“Despite the slowdown in other sectors of the economy, all geographical locations for that matter, the demand for housing loans has been good and sustained, and we are seeing growth of close to 20% this year for 2012-13 as compared with last year’s 17% between banks and HFCs,” he said. NHB plans to disburse close to Rs 17,000 crore as refinance support to banks and housing finance institutions in 2012-13 against Rs 14,400 crore in 2011-12.

SBI cuts car, home loan processing fees by 50%

18 Oct 2012, ET Bureau.

MUMBAI: The country’s largest bank, State Bank of India, has reduced its processing fee on home loans and car loans by half in a move aimed at attracting customers and beating competition.

The decision comes soon after many PSU banks announced a complete waiver of processing fee for a limited period, while private banks announced innovative schemes to attract customers.

SBI already offers the lowest rate on home loans. Besides hoping to lure new customers, it is also targeting those of rivals like HDFC, Axis Bank and ICICI Bank by reducing processing fee.

RBI’s ban on pre-payment penalty has made it easier for borrowers to shift from one home loan lender to another at minimum cost. SBI will now charge Rs 1,000 as processing fees for loans up to Rs 25 lakh, Rs 3,250 for loans between Rs 25 lakh and Rs 75 lakh, and Rs 5,000 for loans above Rs 75 lakh.

It would charge a flat fee of Rs 1,000 from borrowers who plan to switch to it. On car loans, it would charge a minimum of Rs 510 and a maximum of Rs 5,100 processing fee. The reduced processing fee will be in effect till December 31.

“There is already heartburn among home loan customers who are paying a higher home loan interest rate. They have paid a fee to their existing bank. There is no point charging them again,” a senior SBI officer said not wanting to be named.

Indiabulls inks pact with Doha Bank for NRI home loans

4 Oct, 2012, PTI

DUBAI: Indiabulls Group has entered into an agreement with Qatar’s Doha Bank for offering mortgage loans to latter’s NRI customers for acquiring properties in India.

The agreement was signed by Doha Bank Group CEO R Seetharaman and Indiabulls Group Executive Director Ajit Mittal.

“The tie-up with Indiabulls will provide an opportunity to Doha Bank NRI customers to approach for Housing Loans to purchase property in India… Doha Bank is only bank in Qatar to have such arrangements for its NRI customers,” Seetharaman said.

Indiabulls Group Executive Vice President Kubeir Khera was also present on the occasion.

Commenting on the alliance, Mittal said the partnership with Doha Bank marks an important milestone in Indiabulls’ quest for a global footprint.

“We are very proud to have partnered with Doha Bank, which is one of the largest retail banks in Qatar – we would serve the growing demand from expatriate Indians for home loans and property acquisition. Our housing projects have evoked a tremendous interest among the NRI community,” he said.

Indiabulls Group is one of leading business houses in India in the areas of housing finance, real estate and infrastructure development. Indiabulls Housing Finance Company has presence through 180 branches in 100 cities across India.

Going to take a home loan from PSU bank? Get one for car free

4 Oct, 2012, Atmadip Ray & Sangita Mehta,ET Bureau

KOLKATA/MUMBAI: You have heard of combo offers on pizzas, colas, FMCG goods, TV sets or even audio systems. Now, how about a combo offer on bank loans? Faced with a slump in demand for funds from corporates, public sector banks are stepping up the gas on retail loans with combo offers.

It is almost a retail loan mela, not like the one in the 1980s – associated with the then junior finance minister Janardhan Poojari – that nearly sank the system, but a voluntary drive by bank managements.

‘No processing charges on home loan if availed with car loan’ – screams a banner outside a UCO Bank branch. The Kolkata-based lender is rolling out standalone offers too: ’50 per cent off on processing charge on home loans’, ‘100 per cent off on processing charges on car loans’.

“We have noticed that a segment of customers prefers to take home and car loans together. We have lined up the combo scheme for them,” said UCO Bank CMD Arun Kaul. “The design of the scheme (is such that it) will not put additional stress on customers or the bank’s asset quality. In any case, we lend only after we are certain about a customer’s repayment capacity.”

Going to take a home loan from PSU bank? Get one for car free

UCO is not alone in pushing retail loans, hitherto the forte of private lenders such as HDFC Bank and ICICI Bank. State Bank of India and its associates, Union Bank and United Bank are also doing the same.

“The corporate pipeline is pretty weak for term loans, so we are trying to increase our coverage in the retail space,” said SBI CMD Pratip Chaudhuri. “No matter what the interest rate for the corporate sector, there is hardly any demand for term loans,” he added.

Industrial credit growth at an annual 16 per cent is the lowest in past 32 months as companies put on hold projects due to policy uncertainty. As many as 48 per cent of industrial segments reported a growth of less than two-thirds of the previous year, said Emkay Global in a report.

SBI, which recently lowered its base rate by 25 basis points to 9.75 per cent, has launched a series of offers to boost retail loans. It halved the conversion fee to 0.50 per cent and lowered the processing fee to Rs 1,000 for home loan borrowers shifting to the state-run lender from a competitor. The conversion fee is the charge paid by existing customers to shift to lower interest rates paid by new customers. SBI’s existing customers were also given the option to shift to lower rates for a nominal fee of 1 per cent of the outstanding loan.

“The idea behind being aggressive on home loans is that you can capture the full value chain of individual relationship and, therefore, cross-sell a whole range of products,” said S Mundra, executive director of Union Bank of IndiaBSE -1.05 %, which took the lead in lowering home loan rates in May.

In April, the government-the majority owner in state-run banks -instructed them to turn aggressive on retail loans. Financial Services Secretary DK Mittal told the chief executives of public sector players to make their rates competitive vis-a-vis private rivals. The move seems to have paid off.

Federal Bank offers home loans at base rate from October 3-18

3 Oct 2012, PTI.

┬áMUMBAI: Private sector lender Federal Bank today said home loans will be offered at its base rate, which is pegged at 10.45 percent, from October 3 to October 18 as part of the 67th anniversary of its founder’s day celebrations.

The Kochi-based bank will also offer discounts in some other segments during this period.

The bank, which has 1,010 branches spread across the country, had total business of Rs 86,693 crore by end of the last fiscal.

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