SBI OFFERS HOME LOANS AT 8% FLAT

Search News

THE country’s largest bank, State Bank of India (SBI), has unveiled an offer to provide loans to all new home buyers at a fixed rate of 8 % — the lowest rate offered by any lender.

This rate will be applicable to all new borrowers irrespective of the loan amount. However, the fixed rate of 8% on home loans will be effective for only one year. SBI’s move is aimed at stimulating demand in the home loan market.

All customers of SBI who have already taken a loan under a special scheme — featuring an interest rate of 8.5% for a Rs 5 lakh loan and 9.25% for a Rs 20 lakh loan — will also benefit under the new offer announced. SBI will also charge them 8% for one year on their borrowings. After one year, these borrowers will have to pay the earlier contracted rate which in the case of special scheme borrowers will be 8.5% for loans up to Rs 5 lakh and 9.25% for loans up to Rs 20 lakh.

For those who borrow above Rs 20 lakh, SBI will charge the prevailing home loan rate. SBI has said the offer is applicable only up to April 30, 2009. Existing customers of SBI can also avail of a home loan at 8%. They can borrow up to 10% of their exposure subject to a cap of Rs 5 lakh at 8%. With this, SBI will be offering the lowest interest rate on home loans. This also means that new borrowers who would otherwise have paid an interest rate of 10.75% for loans between Rs 30 lakh and Rs 75 lakh will now be charged only 8%, which will be on a fixed rate basis for one year.

Banking industry analysts said the move to offer a special rate of 8% comes just two days before external affairs minister Pranab Mukherjee, who also holds additional charge of the finance ministry, is due to meet the chiefs of state-owned banks to review their performance. Among other things, the finance ministry has also told banks to provide information on how borrowers have responded to the special home loan scheme introduced in December 2008.

Some senior bankers said the demand for home loans will pickup only after builders cut rates. “A borrower would first take into consideration the price of the flat and than look at the interest rates. If they feel that the property is over-priced, they will not borrow just because interest rates are low,” said an official in a stateowned bank who heads the credit portfolio.

SBI has also decided to provide an additional working capital facility of 20% of the fund based limits at 8%. This is aimed to “take care of inventories of raw materials, finished goods as also delayed payments from the buyers in the current downturn,” the banks said in a statement to media. This loan offer at 8% will be applicable for one year.

SBI will also charge 8% on term loans to SMEs for purchase fixed assets including generator sets. The rate of 8% will be fixed for one year and thereafter the applicable rate will be charged. All the above loans will be on offer till April 30, 2009 and interest will be reset after one year.

Find Lawyer / Law Firm

Importance of Immigration Lawyers

As Indians we know India in itself is an amazing nation and even the world agrees with that, however, grass is always greener on the other side and that is why Indians desire to immigrate a More

Legal Consultation - Consult over phone, chat or send questions

Helplinelaw can set up your session with quality and experienced lawyers to discuss and resolve your legal matters. You can avail consultation in form of sending questions, phone call or webchat discussion  More