SBI plans home-loan rate cut

New Delhi October 21: Those aspiring to own a house of their own may have something to cheer about as one of the country’s largest home loan lenders State Bank of India (SBI) is on course to slash its housing loan interest rates by about 50 basis points before Diwali. Emboldened by the Government pumping in liquidity worth

Rs 1,00,000 crore into the country’s financial system, SBI is finalising plans to slash rates after the credit review of the Reserve Bank of India (RBI) on Friday. Even though loans will become cheaper, the bank plans to tighten the criteria for lending to individual borrowers.

“With a cash deposit ratio (cash in hand plus cash with RBI) of 9.88 per cent and cash reserve ratio (the portion of deposits banks keep with the RBI) of 9 per cent banks were left with only 0.88 per cent liquidity to supply credit in the market a fortnight ago. But with the RBI, bringing down the cash reserve ratio by 150 and 100 basis points over two weeks banks can now lend easily to retail borrowers,” highly-placed sources told The Indian Express.

The current cash reserve ratio is about 6.5 per cent giving banks head room to lend to the market. The CRR cut on Thursday by the RBI had injected a Rs 100,000 crore liquidity into the system. Though loans may become cheaper during Diwali, the public sector bank plans to further tighten norms for checking the credit worthiness of individual borrowers. “The SBI wants to make a thorough check of the financial capability of the individual to pay back, to avoid defaults in the current market scenario globally,” an SBI official said. Union Bank of India (UBI) and Punjab National Bank have also lowered interest rates on home loans by 25-50 bps in the past one week.

However, the bank plans to go slow on commercial lending to the real-estate sector. With frequent advisories from the finance ministry and the RBI cautioning over exposure to the real-estate sector, banks have been going slow on lending to developers.

As a result real estate prices have begun to decline. “In the secondary market (market for existing property) housing prices have come down by 10-15 per cent in the past

six months. But price cuts in primary market (market for new homes) are still to occur. SBI’s move will be a bigger relief for existing home loan borrowers but for new borrowers, developers need to cut rates first before transactions pick up,” a senior real estate analyst based in Mumbai told The Indian Express.

Ads By Google

Message*	Maximum characters allowed

Name*		Email ID*
Subject*		Country*

TERMS OF USE:
The views, opinions and comments posted are your, and are not endorsed by this website. You shall be solely responsible for the comment posted here. The website reserves the right to delete, reject, or otherwise remove any views, opinions and comments posted or part thereof. You shall ensure that the comment is not inflammatory, abusive, derogatory, defamatory &/or obscene, or contain pornographic matter and/or does not constitute hate mail, or violate privacy of any person (s) or breach confidentiality or otherwise is illegal, immoral or contrary to public policy. Nor should it contain anything infringing copyright &/or intellectual property rights of any person(s).

I agree to the terms of use.

Mail this page