Tag: home loan interest rates sbi

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

SBI chief pitches for 50 bps cut in CRR, repo rate

18 Mar 2013, Business Line.

A softening in lending rates will be conducive for kick-starting the investment cycle in the country, according to State Bank of India Chairman Pratip Chaudhuri.
Whichever country has shown rapid growth, particularly in the manufacturing sector, the interest rates were much lower.
Rates of interest need to come down further. Our base rate is at 9.70 per cent, I would like to see a base rate of something like 9.50 per cent because internationally the rates are so low,” said Chaudhuri.

Base rate is the minimum lending rate below which banks cannot lend. The actual lending rates charged to borrowers by banks are the base rate plus borrower-specific charges, which include product-specific operating costs, credit risk premium and tenor premium. India’s largest bank last pared its base rate from 9.75 per cent to 9.70 per cent on January 30.

SBI nudged its base rate lower a day after the Reserve Bank of India cut both the repo rate and the cash reserve ratio (CRR) to 7.75 per cent (from 8 per cent) and 4 per cent (from 4.25 per cent of deposits), respectively.

Repo rate is the interest rate at which RBI lends short-term money to banks. CRR is the slice of deposits that banks have to park with RBI. Chaudhuri said: “If you are a corporate in India and want to set up a petrochemical plant, you will pay 11 per cent interest rate. But if your competitor in Dubai is setting up a similar petrochemical plant, he will pay an interest rate of 3 or 4 per cent… So, you are uncompetitive from day one.”
Policy rates

The SBI chief said lending rates in the banking system could soften if the central bank cuts key policy rates in its mid-quarter review of monetary policy, which is due on Tuesday.

“Both the CRR and the repo rate should be cut by 50 basis points each. CRR cut is more important as it releases primary liquidity into the banking system.

“Whereas a repo rate cut is more of a signal/an indication (of the direction of interest rates). It is not very material but, yes, the cost of refinance goes down,” said Chaudhuri.

The central bank has underscored that subdued investment activity in the economy has led to the decline of capital goods production. With investment activity remaining subdued, the prospects of a recovery in industrial growth appear weak.

In its latest macroeconomic and monetary developments document, the RBI observed that the emerging slack in investment needs to be addressed. This slack has emerged from a combination of domestic and global factors.

“While global growth may remain slow for some more years as significant fiscal adjustment is needed to overcome the debt overhang in the advanced economies, the domestic growth could respond to the policy (reform) action that has now begun,” it said.

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