Tag: sbi housing loan interest rates

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

State Bank chief wants 100 bps cut in CRR

Mumbai, April 16:  Business Line

A cut in Cash Reserve Ratio will be much more effective in bringing down lending rates than a repo rate cut, said State Bank of India Chairman Pratip Chaudhuri.

A strong votary of abolishing the CRR, the SBI chief said he will bring the base rate down by 20 basis points, if the Reserve Bank of India cuts the CRR by 100 basis points. Base rate is the minimum lending rate below which banks cannot lend.
Policy meeting

The RBI will review key policy rates in its annual policy meeting scheduled on May 3.

Currently, the CRR (the slice of deposits that banks keep with RBI) and the repo rate (the interest rate at which banks borrow short term funds from the RBI) are at 4 per cent and 7.50 per cent, respectively.

“Repo rate has very little or insignificant impact on the cost transmission. The only thing that can significantly bring down the base rate is the CRR. “Looking at the inflation numbers yesterday, I am encouraged to recommend a 1 per cent (100 basis points) reduction in CRR,” Chaudhuri said.

Also, a CRR cut will release more liquidity into the banking system. “The banks will be less desperate for deposits so it (liquidity) will have a more benign impact on the interest rates,” the SBI chief said.
THREE-DAY DEPOSITS

Chaudhuri, who mooted the idea of banks being allowed to introduce ultra-short term deposits of three days maturity, said there will not be any liquidity management issues if such a product is introduced.

Pointing out that absence of such a product is making banks uncompetitive, Chaudhuri reasoned that if banks can take care of seven-day deposits, then they can take care of three-day deposits too.

The SBI chief said that he has explained the new idea to the RBI top brass.

In any case, there is no rule saying that customers cannot withdraw money before the seven-day maturity period, he said. “So, if a seven- day deposit is stable then three-day deposits will also be stable.”

SB deposits

Chaudhuri pointed out that the entire savings bank deposits of banks constitute 25 to 40 per cent of their total deposits and they are with drawable on demand.

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