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.