India’s largest bank, State Bank of India is going to freeze the rates on all new home loans at 8% for a year and will offer new home loans at 8% from February 2 to April 30, 2009. SBI is going to offer multipurpose loans for existing home loan borrowers. The banking major will also offer loans worth 10% of existing home loans, upto maximum of Rs 5 lakh, at 8% for a year.
SBI’s new rates: Existing loans under home loan package revised to 8% for a year; SMEs to get additional working capital loans of 20% at 8%; SME working capital loans to be repaid in one year.
SBI Chairman OP Bhatt said that the softening bias of interest rates will continue in the medium term. He feels that there is a room for further reduction in interest rates. Credit is not flowing freely not because banks are averse to lending but because the consumers are not sure whether to borrow or not, he added.
Due to this, other banks are also feeling pressure to reduce their respective rates. Canara Bank CMD said that the bank will bring down the rates further. The bank will respond to SBI’s move to cut home loan rates. It might decide on new loans today or tomorrow.
UCO Bank CMD said that there is a scope for 100-200 bps reduction in lending and deposit rates.
PNB CMD said that the bank will cut the rates further even inflation falls. PNB has already cut the PLR and that should translate into reduced home lending rates.
Corporation Bank is going to reduce deposit rates from tomorrow by 50-75 bps, reports CNBC-TV18 quoting agencies. The bank is going to reduce the lending rates in retail sector by 50-100 bps.
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