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SBI Extends Special Home Loan Scheme till Dec 2010
The State Bank of India (SBI), the pioneer of the special home loan scheme, has extended its special home scheme to December 31, 2010. “We did a cost analysis of our funds and realised that it is possible to continue with the special home loan scheme without being hit on our net interest margin,” a senior SBI official told Financial Chronicle. The special home loan offers loans at 8 per cent for the first year, and then 9 per cent for the next two years after which it will revert back to the floating rate of interest that would be decided by the bank.
The special home loan scheme has held SBI in good stead with the home loan book of the bank being the largest at Rs 74,669 crore with the loan book growing by Rs 3,476 crore sequentially over the fourth quarter (year to date figure). During the quarter, the bank disbursed Rs 4,660 crore of home loans. The reason why banks will like to continue with the special home loan scheme is to give a push to the credit growth, which is still sluggish. The credit growth during the year from March to date has been around 11 per cent, with sudden spurts of credit growth in certain fortnight.
SBI subsidiary State Bank of Hyderabad (SBH) on Tuesday reduced its home loan rate by 25 basis points. It will now offer housing loan at fixed rate of interest of 8.25 per cent for the first year as part of a housing loan campaign valid till November 15. According to the bank, this is a move towards giving continued thrust to the housing loan portfolio and to cash-in on surge in home buying during the festive season. Under this campaign, SBH will offer a fixed rate of interest at 8.25 per cent for first year, 9.25 per cent (floating) for second and third year for loans up to Rs 50 lakh. For loans above Rs 50 lakh, the bank will offer floating rate of interest at 9.5 per cent for second and third year.
From the fourth year onwards, the rate is linked to the base rate, which effectively works out to be 9.75 per cent for loans up to Rs 50 lakh and 10.75 per cent for loans above Rs 50 lakh at present. Further, SBH is also offering 50 per cent concession in the processing fee during the campaign. Bhagwathi Rao Sandilya, assistant GM (personal banking) at SBH, said, “We feel that existing market conditions are conducive for this campaign. During Dussehra and Diwali, there is a spike in home buying. Therefore, we want to cash in on this trend with the reduced teaser rate. However, we don’t intend to extend this offer beyond two months in the hardening interest rate environment. We expect housing loan business to the tune of Rs 300 crore from this campaign alone.”
According to Sandilya, SBH has over 1 lakh home loan accounts with a portfolio size of Rs 5,280 crore as of August 2010. The total business of SBH has crossed Rs 134,000 crore. The bank has a network of 1,218 branches.
News Published Under: Banking and Finance, Delhi, Gurgaon, Home Loans, Mumbai, Noida, Pune, Real Estate Developers, Real Estate India | No Comments »