State Bank of India, the country’s largest bank, has advanced Rs 1,350 crore in home loans in the first 40 days (till mid-March) since February 2, 2009 when the 8 per cent scheme was announced. This includes both fresh loans and loans taken over from other banks.

An SBI official said the bank did not separately collect data on home loan transfers from other banks. But the 8 per cent scheme did create a lot of discomfort for the big players including home finance company and market leader HDFC that had a 40 per cent share of the home loan market. HDFC chairman Deepak Parekh had actually called the SBI 8 per cent scheme a gimmick.

In the whole of calendar year 2008, SBI had disbursed Rs 9,235 crore in home loans. This, however, includes loans that the bank extended to housing finance companies such as HDFC which on-lend it to retail customers. In other words, in just 40 days since February 2, SBI disbursed 15 per cent of the total funds advanced during January-December 2008. The battle for market share is expected to only intensify going forward with SBI extending its concessional home loan and car loan rates up to September 30.

The bank estimates a 25 per cent growth in credit offtake in the next three years. This is much higher than the industry average of around 19-20 per cent during the period, said SBI chairman OP Bhatt said. He said lending and deposit rates are expected to fall by another 25-50 basis points in the next six months. His bank has cut its BPLR by 75 basis points from 13 per cent to 12.25 effective from January 1, 2009. Lower rates are likely to pressure net interest margins, but Bhatt expected SBI would maintain its at around 3 per cent.

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