SBI begins selective repricing of loans

After slashing term deposit rates aggressively, State Bank of India (SBI), the country’s largest lender, has begun raising interest rates on corporate loans by up to 50 basis points.

The move is part of the bank’s strategy to ensure that its net interest margin (NIM) – which is the difference between the cost of funds and the interest earned – improves over the next few months.

The bank, which saw its NIM drop to 2.30 per cent by June-end, is trying to go back to the 3 per cent comfort zone. Bank executives, however, said that the lender was likely to end the current financial year with an NIM of 2.55-2.6 per cent.

The bank which mopped up over Rs 1,000 crore-a-day at the peak of the financial crisis last year, has lowered deposit rates on half-a-dozen occasions during the current financial year. For retail deposits of up to Rs 1 crore, the peak term deposit rate has been lowered by 300 basis points to 7.5 per cent over the last 12 months, while it brought down the prime lending rate by 200 basis points to 11.75 per cent.

While the cost of funds would take time to reflect the changes, this period, marked by a sharp slowdown in credit demand, has affected SBI’s interest income.

The impact of a cut in lending rates on interest income was immediate, but the benefit of slashing deposit rates will be gradual. Bank executives said, the subdued NIM was also a reflection of the decline in the credit-deposit (C-D) ratio.

The high margin in September 2008 was possible when the C-D ratio was 71-72 per cent. The ratio has now dipped to 67 per cent due to a slowdown in credit offtake, a fallout of the global financial crisis. “Nothing drastic can be done on the interest income side in the short run,” said a senior SBI executive.

While the credit off-take remains subdued, the bank has been able to rework rates offered to large companies and mid-size companies in the second quarter. “We have been able to increase lending rates by up to about 50 basis points, especially for those companies that have come up for repricing,” an executive said. The reset clause in loan agreements was being used to reset interest rates.

They said the move should help push up margins marginally. As credit offtake gathers momentum in third and fourth quarters, the rate charged on fresh credit could be higher and that should boost margins.

On the deposit side too, the headroom available was limited. Once credit demand picked up, liquidity in the system was expected to come down. In addition, the Reserve Bank of India would also initiate measures as part of its strategy to shift to a tighter monetary policy regime. Further, SBI and other banks would have to raise rates to counter competition from other asset classes as the stock market sentiments have improved.

But SBI executives said that even if they had to raise rates for retail depositors, the bank’s move to offer high rates last year was helping them lower their dependence on high-cost bulk deposits.

As a step towards reducing dependence on bulk deposits, the bank floated a 1,000-day deposit scheme in October 2008, offering 10.5 per cent interest rate aimed to garner retail resources. The scheme has been withdrawn now

Source : http://www.business-standard.com/india/storypage.php?autono=372407

Banks sweeten home loans with festival offers

MUMBAI: In an attempt to shore up credit demand, banks are rolling out festival schemes on home loans ahead of Diwali. Deals include teaser rates  for initial years, with some lenders giving an option to shift to either fixed or floating rates in subsequent years.

Lenders like Canara Bank, Bank of Maharashtra (BoM) and Dena Bank are offering fixed-rate loans for the first five years, and subsequently, linking the loans to their prime lending rates. While others like Bank of India are offering fixed-rate loans for the first two years. India’s largest bank SBI is offering fixed rates for the first three years. The competition to gain market share has resulted in a small price war.

On Thursday, Development Bank of Credit introduced a fixed rate of 7.95% for the first year — the lowest, at least, for the first year. From the second year onwards, the home rates will be linked to floating rate loans. BoM and Dena Bank offer a fixed rate of 8% for loans up to Rs 30 lakh in the first two years, while Canara Bank offers 8% in the first year for Rs 30 lakh and SBI offers 8% for the first five years for loans up to Rs 5 lakh.

Most banks have also waived off the processing fee during the festival season. Traditionally, home sales peak ahead of the academic year in June, with families looking out for new homes during summer vacations. However, this year’s summer sales were flat due to uncertainties. Now, builders and lenders are making a fresh pitch to push sales during Diwali through limited period offers. Interestingly, the offers are coming largely from PSU banks. HDFC, ICICI Bank and LIC Housing have not yet announced any festival offers, but announcements closer to Diwali are not ruled out either. The three lenders charge interest at 8.75% on their lower-end loans.

Bank officials are hopeful that the retail credit growth will contribute substantially for the credit demand in the third quarter of this fiscal year. Most offers are till December 31, 2009. “The demand for home loans is better than the past years. But at the same time, we are seeing many applications which are transfer cases (from another bank),” said AC Mahajan, chairman and managing director of Canara Bank.

Banks like SBI, Canara Bank, BoM, BoI and Dena Bank are offering fixed-rate loans for the initial years. However, banks like BoB and PNB are offering fixed rates, besides giving floating rate loans.

“The demand for auto loans continues to be higher than home loans. But at the same time, we are witnessing better demand in the past few weeks in small- and mid-sized towns,” pointed out M Narandran, ED of BoI.

Source : http://economictimes.indiatimes.com/personal-finance/loan-centre/home-loans/home-loans-news/Banks-sweeten-home-loans-with-festival-offers/articleshow/5088346.cms

Home loan rates dive

For those planning to take a loan to buy their house, there is good news. Several banks have slashed home loan rates recently. Again.

Bank of India has come up with a festive offer called Star Home Loan, which can be availed till December 31. For a loan of up to Rs 50 lakh, the rate of interest will be 8.50 per cent in the first year and 9.25 per cent in the second.

For loans of Rs 5 lakh-1.5 crore, the interest in the first year will be 9.75 per cent and 10.50 in the second. From the third year, the then floating rate of the bank will be applicable in both the cases.

Union Bank of India [ Get Quote ] has launched a special festive offer on home and auto loans. As per the offer, for home loans up to Rs 50 lakh, the bank will charge a fixed rate of 8.50 per cent for the first three years. From the fourth year, the interest will be a floating rate linked to the benchmark prime lending rate of the bank for all tenures. The bank has also reduced rates for car loans by 75-100 bps, depending on the tenure.

Says R.K. Nikra, chief manager, “The offer will be effective from September 1 September till October 31.”

A few days before the UBI offer, ICICI Bank [ Get Quote ] launched a special offer for all new home loans. As per the new offer, the bank will charge an interest rate of 8.75 per cent for loans up to Rs 20 lakh. For loans of Rs 20 lakh-50 lakh, the new interest rate is 9.25 per cent.

Borrowing above Rs 50 lakh will attract 9.75 per cent interest rate. Effective from August 20, the scheme is available only for a limited period of time, said an ICICI spokesperson. Apart from the special offer, ICICI Bank’s home loan interest rates are in the range of 9.25-11 per cent.

Both theses offers came within weeks of the State Bank of India (SBI) cutting rates by 50-75 bps on high-value home loans. Earlier, SBI had launched a new home loan scheme offering 8 per cent for 1-5 years, depending on the amount, with zero processing fees, as against an average of about 10 per cent charged by others.

Among other players who have cut home loan rates are Punjab National Bank [ Get Quote ], housing finance majors LIC Housing Finance [ Get Quote ] and HDFC [ Get Quote ].

Source:http://business.rediff.com/report/2009/sep/15/perfin-home-loan-rates-dive.htm

SIB announces new home loan scheme

Kerala-based South Indian Bank (SIB) has announced a new low-rate housing loan scheme with fixed rate of interest for the first three years.

The scheme, titled ‘SIB Shelter’ with fixed interest rate for the first three years, would provide loans for purchasing ready-built houses or flats or constructing new ones on one’s own land anywhere in India, a SIB release said today.

The interest rates under the scheme would be as low as 8.50 per cent fixed per annum for the first 18 months and 9.50 per cent in the following 18 months, it said.

This competitive package comes complemented with lower interest rate and speed in disposal of housing loan applications from 550 Core Banking System (CBS) branches all over India, it said.

“The SIB Shelter is our festival bonanza to those who wish to realize the cherished dream of owning a home faster,” said Dr V A Joseph, managing director and chief executive officer of the bank.

Source : http://www.business-standard.com/india/news/sib-announces-new-home-loan-scheme/73131/on

SBI Purana Bazar loan mela underway

Dimapur, August 24 (MExN): The State Bank of India, Purana Bazar Branch has launched a special campaign starting from August 24, Monday to August 26, Wednesday for Personal loan, Car loan and Home loan to government employees. This was stated by the Branch Manager, SBI Purana Bazar while also informing that all regular government employees with a minimum service length of two years serving within the district and drawing their salary through salary accounts maintained with any branch of the SBI are eligible. Among others, the campaign is giving out special concession in interest rates for car loan and Home loan for a limited period. It was informed that loan processing fee for car and home loans have been waived for a limited period. Personal loans upto Rs 3 lakh will be sanctioned and disbursed immediately on submission of necessary forms/ documents, stated the Branch Manager.
Application forms will be issued on the above mentioned dates from 10:30 am to 5:00 pm on production of original identity card and passbook besides quotation/invoice in case of car loan and patta/jamabandi, sale deed/gift deed, mutation order etc. in case of Home loan are also to be produced, it was informed.

http://www.morungexpress.com/regional/31662.html

SBI peps up home loans

Mumbai, Aug. 7: The State Bank of India today fired a fresh salvo in the housing finance market by capping the interest rate at 8 per cent for five years on loans of up to Rs 5 lakh.

The bank said it would also provide loans up to Rs 50 lakh at 8 per cent for the first year and 8.5 per cent in the second and third years. The SBI has turned aggressive in the highly competitive home loan market, which has been dominated by HDFC.

HDFC now provides new home loans up to Rs 15 lakh at an interest rate of 8.75 per cent. For loans between Rs 15 lakh and Rs 30 lakh and that above Rs 30 lakh, it stands at 9 per cent and 9.50 per cent, respectively, for a 20-year tenure.

The SBI’s home loan offers are easily the cheapest in the market today.

Back in February, the SBI stunned the market by capping the interest rate on all home loans at 8 per cent in the first year. It improved the bait in June when it set a Rs 30-lakh cap for its Easy Home Loan Scheme, which fixed interest rates at 8 per cent in the first year and 9 per cent in the second and third years.

The SBI today said it was launching a three-month long “SBI My Home Campaign” from August 8 to facilitate home buyers during the forthcoming festival season. The bank said it would not charge any processing fees on the home loans.

Individuals can now borrow up to Rs 5 lakh under SBI Hi-Five Home Loan at an interest rate of 8 per cent fixed for a period of five years. Thereafter, the customer has an option to choose between a floating rate of 2.75 per cent below the State Bank Advance Rate (SBAR) and a fixed rate of 1.25 per cent below the SBAR for a further loan term of five years. The SBAR is the bank’s benchmark rate and stands at 12.25 per cent.

Borrowers of home loans of up to Rs 50 lakh will have the option at the end of three years to choose between a floating rate of 2.75 per cent below the SBAR and a fixed rate of 1.25 per cent below the SBAR. The tenure of these loans can stretch up to 25 years.

P. Nandkumaran, general manager, retail loans at the SBI, told The Telegraph that in the second scheme, the effective rate of interest for the entire tenure of the loan will be around 8.71 per cent.

“No bank now offers that kind of rate and if we were to minus the processing charges, the effective rate will come down further by another 10 basis points,” he said.

IDBI rate cut

IDBI Bank has slashed interest rates on deposits by 25-50 basis points across different maturities, effective August 12. The lender has also cut auto loan rates by one percentage point. The bank has not made any change in rates for deposits up to six months.

Nandkumaran said the bank had seen home loan sanctions jumping to Rs 2,100 crore a month from Rs 1,500 crore since it offered the 8 per cent interest rate scheme. “We expect a much better response from this scheme,” he said.

Analysts aver that while the market share of the SBI in the home loan segment has risen over the past six months, HDFC continues to be the leader. The SBI’s market share in the home loan market is now reported to be a little over 20 per cent. Although present figures for the country’s largest home financier HDFC is not known, the corporation had a market share of 40 per cent during the fiscal year ended March 31.

Source :http://www.telegraphindia.com/1090808/jsp/business/story_11335730.jsp

SBI’s launches ‘My Home’ campaign for home loans

MUMBAI: State Bank of India on Friday said that it was launching a three-month long home loan campaign at attractive interest rates and zero  processing fee to facilitate home buyers during the forthcoming festival season.

Christened SBI My Home Campaign, it will be launched tomorrow, a press release issued here said.

The public sector lender said that one could borrow up to Rs 5-lakh under the SBI Hi-Five Home loan at 8 per cent interest (fixed) for five-years.

Thereafter, the customer has an option to choose between floating rate of 2.75 per cent below the State Bank Advance Rate (SBAR) or a fixed rate of 1.25 per cent below SBAR for a further loan term of five-years, the release said.

For those needing loans up to Rs 50-lakh, there is the SBI Easy Home Loan, where interest is fixed at 8 per cent during the first year and 8.5 per cent per annum during the second and third year.

After three-years, the customer can choose between a floating rate at 2.75 per cent below SBAR or a fixed rate at 1.25 per cent below SBAR.

Customers can further consolidate the gains of lower interest rates by availing SBI’s Maxgain overdraft facility, the release said.

Source : http://economictimes.indiatimes.com/Personal-Finance/Loan-Centre/Home-Loans/SBIs-launches-My-Home-campaign-for-home-loans-/articleshow/4868022.cms

SBI’s 2-day car, home loan mela

DAVANAGERE: The State Bank of India (SBI), Davanagere main branch, along with its four other branches including Harihar, is holding a two-day `Home  and Car Loan Mela’ at Abhinava Renuka Mandir, P B Road, in Davanagere on July 25-26, between 10.30 am to 5.30 pm.

Addressing a press conference, chief manager of Davanagere branch H Ranganath said, SBI aims to make at least Rs 15 crore business in this mela. Their earlier mela in December had made Rs 8 crore business, he added. The loan will be sanctioned on the spot for eligible customers. Those who attend the mela should carry any photo identity card, residential address proof, bank account statement for 6 months, salary certificate (for house loan) and a quotation for car loan, Ranganath said.

However, one month time (till September 30) will be given to submit other documents, he added. The rate of interest is 8% for the first year, followed by 9% for the next two years and after that it will be floating according to the existing rates, he said. No processing fee will be charged in the mela, he said.

Branch managers T Sidda Naik, Ashok Patvarkher, along with deputy managers Devendra Bellary and K Umapathy were present.

Source : http://timesofindia.indiatimes.com/NEWS/City/Hubli/SBIs-2-day-car-home-loan-mela/articleshow/4813043.cms

SBI to organize home loan fair

The country’s largest lender, State Bank of India organized ‘SBI Home Fair 2009′ between July 17 and 19 at Mayor Ramanathan Chettiar Centre.

The lender will offer borrowers various concessions on home loans like add-on insurance cover, concessional lending rates, wavier of processing fees; etc. At the same time, the bank will also issue ‘in-principle sanction letters’ to prospective borrowers.

Presently, SBI has a home loan portfolio of at least Rs56,000 crore. Nearly 75 percent of its loan book comprises of loans of up to Rs 20 lakh.

Recently, the bank launched special home loan scheme under which it offered home loan at competitive rate of 8 percent.

During last fiscal the home loan portfolio of the bank grew by 21 percent.

Expecting an increase in demand, the bank has raised its overall target for home loans segment to Rs 30,000 crore, which is a 30 percent increase for current financial year.

Currently, the player has 18 to 20 percent market share in house loans.

Source : http://www.rupeetimes.com/news/home_loans/sbi_to_organize_home_loan_fair_2666.html

SBI disburses home loans via special channels

Country’ largest lender, State Bank of India has been disbursing home loans via non-conventional channels.

Recently, the bank organized a three days ‘SBI Home Fair 2009′ at Mayor Ramanathan Chettiar Centre in Chennai.

The bank has also entered into alliance with 12 builders to promote the home loan segment.

On the occasion, J. Chandrasekaran, Chief General Manager, State Bank of India, Chennai Circle, said that the bank is planning to create special processing channels to extend speedy service to home loan customers.

Explaining the home loan market is conducive, he said, “As builders say the prices have softened, the home loan disbursement is expected to improve.”

The bank aimed to promote its recent home loan scheme – SBI Easy Home Loan and SBI Advantage Home Loan at the exhibition.

At the exhibition, the bank also offered spot in-principle sanction letters to prospective borrowers.

The growth in home loan growth was than more than Rs. 1,000 crore in 2008-09 for the Chennai circle.

The bank has extended 1,800 home loans, amounting Rs. 240 crore during the first quarter of this fiscal in Chennai region, of which nearly 90 percent were less than Rs.30 lakh.

Chandrasekaran stated that the applicable interest rate on home loans approved at the fair would is set to be 0.25 percent less than the normal rate from the fourth year of repayment. He also added that there would be no processing fees on loans.

As many as twenty-four builders and property developers participated in the fair.

Source : http://www.rupeetimes.com/news/home_loans/sbi_disburses_home_loans_via_special_channels_2674.html

SBI to step up home loan disbursals

MUMBAI: State Bank of India (SBI), which is said to have kicked off a war on home loan rates a few months back when it launched the 8% scheme, is set to have stepped up the ante by raising the target on sanctions each month.

SBI had frozen interest rates on new home loans for a period of one year at 8% in February, which was then extended up to September 2009. The initial announcement had triggered speculation that SBI had kicked off a rate war to take on leaders like Housing Development Finance Corporation (HDFC). It also led to HDFC chairman Deepak Parekh calling it a gimmick.

Now, SBI seems to be taking the war to another level. The largest bank has raised the target for home loans to Rs 2,500 crore every month from Rs 1,500 crore disbursed over the last few months. Sources at SBI said that even as the 8% scheme initially witnessed a shift of customers from other lenders, of late, the bank has seen a rise in enquiries from fresh borrowers.

Another indication of the home loan war heating up is the fact that SBI is targeting a growth of 30% in this financial year compared with 21% in 2008-09. On the other hand, HDFC, which saw a growth of 21% in loan disbursements in the previous fiscal, is expected to maintain a growth rate of 18-20% for this fiscal.

SBI is seeing an increase in home loan demand from new borrowers, and loans of up to Rs 20 lakh constitute 75% of its loan book, sources said.

SBI has raised the overall target for home loans to Rs 30,000 crore in 2009-10, which is only slightly lower than HDFC’s loan approvals of Rs 39,650 crore in 2008-09.

In an interview to UTVi earlier this month, HDFC vice chairman and managing director Keki Mistry had said that the lender had loan approvals of over Rs 30,000 crore, and that the 8% scheme of SBI was unlikely to take away business significantly.

Its clear that the country’s biggest nationalised bank, which has a market share of 18-20% in housing loans, is now also looking to being the largest lender in home loans..

Home Loans: Some Facts
SBI has fixed 8% for home loans for first year
SBI has fixed 9% for home loans up to Rs 30 lakh for 2nd and 3rd year
SBI has fixed 9.5% for home loans over Rs 30 lakh for 2nd and 3rd year
HDFC charges 9.25% for loans up to Rs 30 lakh
HDFC charges 9.75% for loans over Rs 30 lakh
SBI home loan portfolio at Rs 56,000cr in FY09
SBI’s home loans grew at 21% in FY09
SBI looking at 30% growth in home loans in FY10
HDFC FY09 loan disbursements at Rs 39,650cr in FY09, growth of 21% YoY
HDFC loans of up to Rs 20 lakh constitute 50% of the loan book
HDFC has market share of 40% followed by ICICI Bank at 21% and SBI at 8%
Analysts say HDFC has around 30% market share in tier-II, tier-III cities
HDFC looking at maintaining 20% growth rate in FY10

Source : http://www.utvi.com/industry-news/banking-industry-news/27079/sbi-to-step-up-home-loan-disbursals.html

Interest rates may go up in 6 months: SBI

KOLKATA: The interest rate might go up by 25-100 basis points (0.25%-1%) in next six months period, SBI chairman O P Bhatt reiterated on Monday, adding that the behaviour of interest rate will largely depend on the liquidity in the market as well as fiscal management. It may be noted that Union finance minister Pranab Mukherjee on Sunday said that the government would ensure that the rates do not go up through proper fiscal management. According to Bhat, the interest rate may firm up after the busy season credit policy. Bhatt added that a minor increase in interest rate would not affect corporates in a big way. “As per the data available, the interest cost is just 8%-9% of the total cost of top 1,000 listed companies. So, an increase in rates by even 100 basis points will not affect the corporate sector significantly. Only there will be a little pressure on the bottomline,” he added. Elaborating the current credit scenario, he said that there is huge liquidity in the banking system. But the loan offtake is very low. “Banks have put over Rs 1 lakh crore with RBI because we have no other options. The credit growth is slow. Even in home loan segment the credit growth is lacklustre. Even after offering as low as 8% interest rate we are not getting adequate home loan customers,” he added. According to him, SBI alone is losing Rs 100 crore every month because of low credit offtake. Bhatt said the net interest margin (NIM) of SBI has come down to 2.32 from 3.16 in last few quarters. “We need a minimum level of NIM to survive,” he added. Bhatt indicated that NIM of 3 would be comfortable. The proposed general insurance venture of SBI will be in place by early 2010. SBI chairman said that it has already received go-ahead from IRDA for the non life venture. Incidentally, SBI is forming a JV with IAG of Australia for the general insurance company. According to Bhatt, the proposed JV for custodian services will be ready in next 4-5 months. Incidentally, SBI is forming a JV with Societe Generale Securities Services for the JV. SBI will hold 65% in the JV firm. Source : http://timesofindia.indiatimes.com/articleshow/4774376.cms

SBI launches two new home loan products at attractive rates

With this latest reduction, the third by LIC Housing Finance in the calendar year, the total reduction has reached 200 basis points in the last six months

Mumbai: The country’s largest lender State Bank of India on Tuesday introduced a new home loan scheme under which it offer loans up to Rs30 lakh at fixed rates of 8% for the first year and 9% for the next two years.

The bank’s earlier offer of home loans at a fixed rate of 8% for the first year ended Tuesday.
Under the new scheme, customers will have two options in the fourth year: a floating rate at 2% below State Bank Advance Rate (SBAR), which is currently at 11.75%,, or a fixed rate of 1% below SBAR with a five year re-set. A re-set means new rates will come into effect at the end of the specified period.

For loans above Rs30 lakh, the interest rate charged from the fourth year will be either a floating rate at 1% below the existing SBAR or a fixed rate of 0.5% below SBAR with a five year re-set.

SBI has a home loan portfolio of at least Rs56,000 crore.
The Indian Banks’ Association (IBA) and member public sector banks in December had announced home loans, in which borrowing of up to Rs5 lakh was offered at 8.5%, and between Rs5 lakh and Rs20 lakh at 9.25%. Both rates were fixed for five years. However, SBI launched its own scheme instead of the five-year fixed rate scheme, offering a lower rate of 8% fixed for only one year.

The IBA scheme also ended Tuesday. According to a senior banker with a large public sector bank, IBA will likely come up with a new home loan scheme within a day or two similar to the scheme introduced in December last year.
In a separate development, LIC (Life Insurance Corporation) Housing Finance on Tuesday announced a reduction in interest rates for its existing home loan borrowers. The floating interest rates for existing customers will now be reduced by 50 basis points on EMIs due on 1 July and payable on 1 August, a company statement said. One basis point is one hundredth of a percentage point.
With this latest reduction, the third by LIC Housing Finance in the calendar year, the total reduction has reached 200 basis points in the last six months.

The company had earlier reduced 1.50% for existing home loan borrowers in two tranches of 75 basis points each in January and April.

http://www.livemint.com/2009/06/30170440/SBI-launches-two-new-home-loan.html?h=B

SBI sees revival in home loan demand with low-interest schemes

State Bank of India’s home loan disbursements under its ‘New happy home loan scheme’ have grown at Rs1,500 crore monthly. This is about Rs400 crore more than the monthly average of Rs1,100 crore it did in the first two months since the scheme was announced.
“Till March we had done Rs 2,348 crore. Subsequently we are sanctioning Rs1,500 crore every month,” P Nandakumaran, chief general manger, personal banking, reportedly said.

Banks which have made aggressive rate cuts have begun to reap the benefit of a revival in home loan demand. They have been able register a jump in their home loan disbursal in the last couple of months by attracting new home buyers as well as existing customers from the other banks and institutions. (See: Public sector banks woo customers with ‘balance transfer’ on home loans)

”About 40 per cent of the new customers that the bank is attracting are those migrating from other banks and institutions that have higher rate of interest. The home loan market is reviving with prices having corrected particularly in tier II and tier III cities. With signs of recovery in the economy, and with people being more certain of their jobs, so many enquiries are translating into sales,” said Nandakumaran.

In the first week of February, SBI had announced an interest rate of 8 per cent for one year – the lowest so far among lenders. In the second year, the rates applicable will be the prevailing rates then.

The bank’s move was to stimulate demand in the housing market at a time when many buyers postponed their purchasing decisions amid economic uncertainty and fear of job losses. The scheme has now been extended till September.

The bank also offers other schemes, which will be valid till the month-end. Under this, it offers a home loan between Rs5 and 20lakh at a fixed interest rate of 9.25 per cent a year for five years, after which rates will be re-set.

SBI, which claims to have the highest growth in its home loan portfolio last fiscal, saw its advances swell to Rs 54,063 crore. This is a 21-per cent increase from Rs 44,626 crore in the previous fiscal. During the same period, the bank’s market share grew to 19.74 per cent from 17.48 per cent.

Banks say home loan disbursals will gather greater momentum in the second quarter of the current financial year after the budget, as they expect major tax breaks for the housing sector.

More than 85 per cent of the home loan market is accounted for by three players – HDFC, ICICI Bank and State Bank of India.

Source : http://www.domain-b.com/finance/banks/SBI/20090629_home_loan_2.html

Happy home scheme: SBI loans Rs 1,500 cr a month

State Bank of India’s disbursements on home loans under its ‘New happy home loan scheme’ have grown at Rs 1,500 crore monthly. This is about Rs 400 crore more than the monthly average of Rs 1,100 crore it did in the first two months since the scheme was announced.

“Till March we had done Rs 2,348 crore. Subsequently we are sanctioning Rs 1,500 crore every month,” P. Nandakumaran, Chief General Manger, Personal Banking, SBI, told Business Line.

In the first week of February, SBI had announced that it will offer an interest rate of 8 per cent for one year – the lowest so far in the industry. In the second year, the rates applicable will be the prevailing rates then.

To stimulate demand

The bank’s move was to stimulate demand in the housing market at a time when many buyers postponed their purchasing decisions amid economic uncertainty and fear of job losses. The scheme has now been extended till September.

The bank also offers other schemes, which will be valid till the month-end. Under this, it offers a home loan between Rs 5 and 20 lakh at a fixed interest rate of 9.25 per cent a year for five years, after which rates will be re-set.

SBI, which claims to have the highest growth in its home loan portfolio last fiscal, saw its advances swell to Rs 54,063 crore.

This is a 21-per cent increase from Rs 44,626 crore in the previous fiscal. During the same period, the bank’s market share grew to 19.74 per cent from 17.48 per cent.

Source : http://sify.com/finance/fullstory.php?a=jg3klpaicdf&title=Happy_home_scheme_SBI_loans_Rs_1_500_cr_a_month&?vsv=TopHP2

Loans likely to get cheaper as Govt prods banks to cut rates

New Delhi, June 10 (PTI) Home and other retail loans and industrial lending may become cheaper soon as public sector banks are likely to cut interest rates after the government today prodded lenders to provide credit at reasonable rates to spur the economy.
“Our bank will decide on lowering interest rates by the end of this month,” country’s largest lender SBI’s Chairman O P Bhatt told reporters after a meeting between PSU bank heads and Finance Minister Pranab Mukherjee here.

Expressing concern over non-availability of credit at affordable prices from banks, Mukherjee said, “As a financial intermediary, the banks have to stand-by to provide credit at reasonable rates. This is an area of concern in many quarters both within the government and outside,” he said.

He said reduction in key rates by RBI is not getting adequately reflected in the reduction of prime lending rates by banks. “I would urge the banks to address these concerns expeditiously and in adequate measure. This will help restore the environment for rapid growth and ensure that the growth process benefits all our people,” Mukherjee said.

To a query as to how much the rates could be cut, the finance minister told reporters, “All possibilities will be explored.I can’t quantify it (rates cut).” PTI

Source  : http://www.ptinews.com/pti/ptisite.nsf/0/F7FA005069D1F8F3652575D1003F7D5E?OpenDocument

BRIEF: SBI offers lower loan rates for green buildings

Now here is another reason to opt for an environment-friendly green building over run-of-the-mill brick and mortar structures. Banks such as State Bank of India (SBI) are offering special loan rates for green buildings.
While the normal home loan rate at SBI ranges between 8 per cent and 9.25 per cent, the rate is 0.10 per cent or 10 basis points lesser for those opting for a home in a green building.

“There is an increasing interest in green buildings and we, as an environment-friendly institution, encourage this and therefore the special rates for green buildings,” said P Nandakumaran, head retail banking, State Bank of India.

“We have got a good response to this scheme too,” he said, while declining to comment on the exact number of loans disbursed to people opting for green building homes.

According to the Indian Green Buildings council (IGBC), “A green building is a construction that uses lesser energy, water and natural resources, creates less waste and is healthier for the people living inside compared to a standard building.”

These buildings are known to give energy savings of up to 30 per cent and save up to 50 per cent of water resources apart from giving people the option of leading a healthier lifestyle.

Source : http://www.tradingmarkets.com/.site/news/Stock%20News/2361511/

As per talks we have made drafting for your approval.

MUMBAI, April 12 (Reuters) – State Bank of India (SBI.BO), the country’s top bank, may extend its 8 percent rate on home loans until September, the Economic Times newspaper reported on Sunday, citing unnamed sources.

In February, SBI lowered home loan rates to 8 percent for new customers available until April 30.

“The proposal has been forwarded to the chairman’s office and approvals for the extension will be made public shortly,” the newspaper quoted the officials as saying.

On Thursday, State Bank of India said it has cut deposit rates by 25 to 50 basis points for deposits below 10 million rupees, effective from Monday.

Since October, the central bank has cut its key lending rate by 400 basis points, most recently in early March, as the policy focus has shifted to boosting demand and arrest slowing growth.

The central bank in March said the reduction in rates should further encourage banks to provide credit for productive purposes at viable interest rates. (Reporting by Jasudha Kirpalani, Editing by Kazunori Takada)

Source  : http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSBOM46509520090412

SBI sees a hit in cheap home loan scheme

Mumbai, March 15: The State Bank of India (SBI) is well on its way to meet the target of its discount home loan scheme.

Already, the bank has sanctioned Rs 1,300 crore in February — the first month of the offer — compared with the target of Rs 4,500 crore till April, when the scheme expires.

Under it, home buyers will pay an 8 per cent interest rate for loans up to Rs 20 lakh for one year, after which the rates will be realigned.

SBI officials said they had overtaken Housing Development Finance Corporation (HDFC) and ICICI Bank to become the highest home-loan lender. “The response to the scheme has been excellent. We have seen volumes going up 50 per cent on a year-on-year basis. We sanctioned Rs 1,300 crore in February itself, which is a record for a month. For the next two months, the figure could be higher,’’ a senior SBI official said.

Analysts feel the bank may offer more such attractive schemes as it wants to keep the momentum going. Besides, it is likely that policy-makers will follow an easy rate regime.

At present, HDFC is the No. 1 player, and the SBI is aiming for that position. “We would like to be there as fast as possible,’’ the SBI official said.

Following the SBI’s offer, other banks have also come out with discount schemes.

The Central Bank of India froze lending rates on new housing loans up to Rs 20 lakh at eight per cent for one year. The PSU bank is planning to disburse at least Rs 500 crore. Canara Bank is offering loans up to Rs 30 lakh at a cocktail of rates. It is 8.25 per cent for the first year, 9.25 per cent for the next 48 months and prime lending rate minus 2.50 per cent, subject to a minimum of 10 per cent, thereafter. The scheme is till December.

Though banking circles feel that the eight-per-cent scheme can wean existing customers from competitors, the SBI official said that was not the bank’s intention.

“We only wanted to offer a value proposition. Though there are instances of switching, we are not banking on it,” the official said, adding that the SBI was also providing complete transparency. “Customers are shown the EMI which they will pay for the first 12 months and thereafter,” he said.

Analysts are divided over the impact. While some feel the SBI’s scheme can be profitable, others think that it will not lead to any significant savings.

Source : http://www.telegraphindia.com/1090316/jsp/business/story_10675796.jsp

Loans to get even cheaper

NEW DELHI: Interest rates on loans — for homes, cars and other kinds of consumer finance — are set to go down by another 0.5 percentage point  following a decision by the Reserve Bank of India to cut key rates to that extent on Wednesday.

The RBI announced that the repo rate, effectively the rate at which it lends short-term funds to banks, and the reverse repo rate — which it gives on funds parked by banks with the central bank — would be cut by 0.5 percentage point with immediate effect. The new repo rate will be 5% and the reverse repo rate 3.5%.

Banks, which have been aggressively slashing rates of late, indicated after the announcement that they would pass on the RBI’s cuts to customers in the form of fresh reduction of interest rates. However, they would also cut interest rates on deposits by a corresponding amount.

Uco Bank chairman and managing director S K Goel said, ‘‘Banks will soon decide to cut rates, which should help in reviving the economy’’. A senior official of ICICI Bank also echoed this view.

In the past, banks have on occasion cut rates for new borrowers without changing the rate paid by existing ones. But this time, old customers on floating rates are also likely to benefit. That is because banks will most probably cut their prime lending rates (PLR), to which the floating rate is benchmarked.
Home loan rates are now around 10% for most public sector banks, while private sector banks are maintaining rates of 11-12%.

SBI has emerged as the most aggressive player with a special scheme under which new home loan borrowers are being offered an 8% rate. Following Wednesday’s announcement, other banks may use the opportunity to come closer to the SBI rate.

Source : http://timesofindia.indiatimes.com/Business/Loans-to-get-even-cheaper/articleshow/4226197.cms

Home loan borrowers switching over to PSBs

State-owned banks trim interest rates on fresh bout of liquidity, but private banks unrelenting to follow suit

Raghu Nair recently pre-paid his home loan with a leading private bank and switched over to a public sector bank (PSB) which charged him a much lower interest rate. The 32 year-old businessman is making a neat saving of approximately Rs 3,000 on his EMI’s every month with the switchover.

To simplify the math, if you had taken a home loan of Rs 20 lakhs on a 20 year term, at an interest rate of 13% two years back, and in case a PSB offers you a fresh loan at 11%, you can make a saving of around Rs 2,600 per month due to the lower interest accruals on the outstanding amount of around Rs 19.47 lakhs.

Public sector banks (PSBs) say that in the last two months, they are increasingly seeing a trend of individuals making similar switches as private banks are unwilling to cut home loan rates. “This trend has been around for about two months now and we see it gaining traction. An interest rate differential of even 2% can make a huge difference especially if the tenure of the loan is longer,” said CMD of Vijaya Bank, Albert Tauro.

Owing to the increased liquidity infused by the RBI in the last few months, PSBs have steadily reduced their interest rates on loans. For instance, some PSBs like Union Bank and Punjab National Bank have reduced their home loans between 125-150 basis points recently. SBI, in fact, is offering home loans at 8%. However, some of the private banks are still charging rates between 12-13% and have not capped it despite PSBs aggressively tapping into this segment.

Bankers, however, warn that though interest rate differentials between home loans from private banks and PSBs do exist currently and there are several factors that one must keep in mind before making the switchover. Banks charge anywhere between 2-3% as pre payment penalties on the outstanding loan. HDFC Bank, for instance, recently hiked its pre-payment charges to 3%. Banks also charge anywhere between 0.4- 1% of the loan amount as processing charges for a fresh loan.

“The loan taker must ensure that the pre-payment and processing charges do not negate the benefit a loan taker gets due to interest rate differentials. The longer the tenure of the loan, the greater the chance of benefiting from this switchover,” said Union Bank of India general manager C Abraham. If the remaining tenure of the loan is five years or less, even a 3% differential might not help too much. By this time, you would have already paid most of the interest amount to the bank,

he added.  Another factor is that the value of your property might be much lesser than say a year back. Hence, while availing a new loan against the property, the amount granted maybe insufficient to fully pre-pay the original loan. This may force you to shell out more money. Vijaya Bank’s Tauro also cautions loan takers to check with existing banks whether they are willing to offer lower interest rates.

Pranav Nambiar / DNA-Daily News & Analysis Source: 3D Syndication

Source : http://www.topnews.in/home-loan-borrowers-switching-over-psbs-2135503

After SBI, Canara Bank to charge 8.25% on home loans

MUMBAI: India’s largest housing finance company HDFC has got more competitors. After State Bank of India, another public sector bank, Canara Bank Tax deduction on home loan Tips for home loan borrowers has come out with a hybrid loan structure- a combination of fixed and floating rate home loan.

The bank will charge an interest rate of 8.25% for the first year for loans upto 20 years. Last month, SBI announced a home loan scheme where interest rates for first year were fixed at 8% and were subject to change from the second year.

To do away with all the uncertainties about the interest rate movement, Canara Bank has proposed to fix the time table of the interest rate that would be charged to customer over the tenure of the loan.

Interestingly, the new scheme introduced by Canara Bank is set to compete not only with HDFC but also with SBI since it allows transfer of loans. This means that a home loan customer of other bank can now switch over to Canara Bank.

The bank has decided to fix rate loan for 20 years with different rates for dif-ferent slabs. For home loans upto Rs 30 lakhs, country’s second largest PSU bank proposes to charge a fix rate of 8.25% for first year and a fixed rate of 9.25% from second to fifth year. From the beginning of sixth year to twentieth year the bank will charge customer 200 basis point below the than prevailing BPLR.

For loans which are above Rs 30 lakhs but below Rs 99 lakh, the bank will charge 50 basis points more. This will work out to fix rate of 8.75% for first year, 9.75% from second to fifth year and 250 bps below the then prevailing BPLR from the sixth to twentieth year.

The bank has fixed a floor rate of 10% for period between sixth year to 20 years. This means that even if BPLR of the bank falls below 12%, the interest rate charged to the customer will be fixed at 10%.

Source : http://economictimes.indiatimes.com/After-SBI-Canara-Bank-to-charge-825-on-home-loans/articleshow/4224213.cms

Few takers for ‘cheap’ home loans news

Two months after lower interest rates were announced for home loans up to Rs20 lakh, the public sector banks have cleared only 28,000 proposals, involving Rs1,550 crore, through these special schemes.

India’s second-largest public sector bank, the Punjab National Bank, has approved only 35 loan proposals, disbursing just Rs1.70 crore under the new scheme, according to data compiled by industry bodies and the government. State Bank of India has done rather better, clearing around 6,500 applications.

Analysts say this is because there is no clarity about how the borrower’s ‘equated monthly instalments’ (EMI) would be affected; and this is a primary concern for home buyers. In fact the Reserve Bank has had to instruct SBI to ensure that customers borrowing under the bank’s special scheme don’t get a rude awakening on their EMIs.

The RBI has asked SBI to give some indication to its home-loan borrowers on the possible EMIs they would have to pay after one year, when the special fixed rate of eight per cent no longer applies.

Under the special loan package pushed by the government to boost real estate demand, public sector banks were more or less ordered to freeze interest rates on home loans up to Rs5 lakh at 8.5 per cent for five years. For loans between Rs5 lakh and Rs20 lakh, the rate has been frozen at 9.25 per cent.

SBI went ahead and dropped the rate further to eight per cent for the first year, and others such as Central Bank of India have also responded similarly.

Further, the banks have decided that borrowers can avail themselves of a loan of up to Rs5 lakh by paying 10 per cent upfront. In case of home loans of Rs5-Rs20 lakh, the upfront payment has been fixed at 15 per cent, compared to 25-30 per cent for other loans.

But with buyers expecting real estate prices to fall further, many are deferring a purchase for the moment, said bankers.

Most public sector banks are charging 8.5-10.5 per cent on a floating rate basis. The country’s largest bank privat sector bank, ICICI is charging as high as 11-12.5 per cent, while HDFC, the largest private mortgage finance company, is charging 10.25 per cent for loans up to Rs20 lakh and 11.25 per cent for loans above Rs20 lakh.

Source : http://www.domain-b.com/finance/banks/20090303_home_loans.htmlThe lowered interest rates for home loans announced recently by public sector banks have not led to the expected increase in demand. For instance, the State Bank of India’s low-interest home loan scheme, which was expected to shake the market, has in fact barely created a ripple.

SBI, Mahindra World City in tie-up for Jaipur hub

JAIPUR: India’s largest public sector bank State Bank of India has signed an agreement with multi-product special economic zone- Mahindra World City
to set up a 25-acre northern hub in Jaipur.

The hub, coming up in the domestic tariff area of the SEZ, would be the banks’ only data processing unit outside Maharashtra. It is likely to create 20,000 jobs in next few years.

Mahindra and Mahindra executive director Arun Nanda said the presence of SBI would give a tremendous boost to the company’s efforts of positioning Jaipur as a specialized banking, insurance and financial services processing hub.

“With the inclusion of SBI, we would now have three top banks of the world – Deutsche bank, ICICI and SBI – in our campus. It will help us to attract other banking, insurance and financial majors to establish their facilities in Jaipur.

ICICI bank has also signed up an MoU with MWC to set up its northern hub while Deutsche bank is already operating its offshore processing unit from this campus. Earlier, Rajasthan chief minister Ashok Gehlot inaugurated Mahindra World City’s light engineering and handicraft SEZ.

The 250-acre light engineering and handicrafts zone form a part of 3000-acre multiproduct SEZ that also have IT, auto ancillary and logistics zone which hosts 17 players including Q H Talbros, Veto Electropowers, Om Metals, Marsons, Dyanmic Engg, Tijara Polyprep, Polymed, A L Paperhouse, Rustic Furniture, Pink city Enterprises, Peadiprint etc..

Apart from the light engineering and handicrafts zone, the 750-acre IT zone of MWC, which is the largest IT SEZ of the country hosts IT majors like Infosys, Wipro, Tech Mahindra, Naggaro Connexions and Truworth.

“We are trying to rope in TCS as well. Our talks are in advance stages. We are a transparent company and want to make this zone a growth driver of this region,” said MWC chairman Sunil Arora.

The Mahindra World City, a 74:26 joint venture between Mahindra Lifespace developers Limited and state owned Rajasthan State Industrial Development and Investment Corporation Limited is likely to attract an investment of Rs 10000 crore over a period of 5 years.

Source : http://economictimes.indiatimes.com/Economy/SBI-Mahindra-World-City-in-tie-up-for-Jaipur-hub/articleshow/4206307.cms

SBI launches new home loan schems

CHANDIGARH: V. Murali, Gener al Manager, State Bank of India, Chandigarh Circle flagged off the Mobile Publicity Van from SBI Zonal Office, Sector 5, Panchkula displaying two Home Loan Products i.e. SBI happy home and SBI life style.  The Publicity Van would be visiting in and around Panchkula for one month from Wednesday.

The publicity material giving details of the schemes will be available with the van.  Public can seek clarifications for their queries regarding both schemes. Speaking on the occasion Sh. Murali said that the Bank expect a good response from the public to these products.

SBI happu home and SBI life style loan is available at 8% (fixed for one year).  No processing fee will be charged on these loans.  While SBI happy home loan scheme will cater to the needs of those who need a home loan, SBI life style scheme will enable the Home Loan borrowers to get a loan at 8% (fixed) for one year to meet short term expenditure, which adds comfort to the life style of the borrowers, such as vacation travel, purchase of gold and life style goods.  This is good opportunity for those paying high interest rate to switch over to lower rate with SBI.  State Bank of India has also reduced interest rate on new car loans to 10% p.a. for a period of one year.

Source : http://www.punjabnewsline.com/content/view/15431/38/

Property prices may come down by another 20%

MUMBAI: Real estate developers are likely to cut home prices by an additional 20% in a bid to lure purchasers and customers who might otherwise  shift to other financial commitments, as the current fiscal draws to a close in March.

With banks also starting to cut home loan rates, people close to the development say that the first quarter of the next fiscal could see a substantial jump in home sales.

Property rates across the country have fallen by about 15-20% with the decline in the economic situation.
According to analysts, the impact from the ongoing financial crunch and mounting pressure from various other circles, could peak by the end of March. That’s when many developers will be forced to sell unsold stock at a much cheaper price, said one executive with a leading developer.

Currently, a lot of real estate developers are rushing to clean up their highly leveraged balance sheets. “In their last attempt to save diminishing margins, we could see some developers make their moves in the last quarter of FY09. To boost sales, a further cut in prices are unavoidable,” said an analyst from a leading investment bank.

India’s property market has been among the hardest hit by the global financial turmoil, as high interest rates and gloomy economic prospects have driven out buyers and squeezed funds for real estate developers.
DLF vice-chairman Rajiv Singh, India’s largest real estate company, has already gone on record to say that prices could crash by another 15%.

Real estate consultants have factored a sharp reduction in rates. “Past experiences show that if the rates range between 7-8%, sales volumes jump substantially,” said Knight Frank India chairman Pranay Vakil, a property consultancy firm.

“After SBI, ICICI Bank and HDFC Bank cut rates, I expect a jump in sales volumes. Developers are also under mounting pressure to meet their interest payment deadlines. It seems, they are also ready to cut the prices further,” he added.

Source : http://economictimes.indiatimes.com/Markets/Real_Estate/Property_prices_may_come_down_by_another_20/articleshow/4072643.cms

SBI to give home loans for as low as 9%

NEW DELHI: Come new year, home loans will get cheaper, but you will also have to settle for lower interest on bank deposits. SBI on Saturday 
announced cuts in prime lending rates (PLR) by 0.75 percentage point and deposit rates by upto one percentage point effective January 1, 2009.

The cut in PLR means that even existing customers who have borrowed at floating rate will see a dip in EMIs. After the rate cuts, SBI home loans of up to Rs 30 lakh, for tenures between 15 and 25 years, will be available at 9.5%, loans of Rs 30 lakh to Rs 75 lakh at 10.75% and those above Rs 75 lakh at 11%. Interestingly, for 5-year home loans up to Rs 30 lakh the rate will come down to 9%, which would be lower than even the concessional rate of 9.25% offered by public sector banks at the behest of the government.

The rate cuts announced by SBI are bound to lead to similar cuts by others in the home loan business, which is good news not just for prospective home buyers, but also the beleaguered real estate sector.

Meanwhile, LIC Housing Finance too announced a 0.75-2.25 percentage point cut in its lending rates for home loans upto to Rs 20 lakh from December 17. A CMD of a public sector bank said that as inflation falls, the deposits and lending rates will continue to move downwards. The cut in rates is a result of the recent fall in cost of funds from the market, a senior SBI official said, and also indicated that the rates could fall further.

SBI also cut deposit rates downwards by 0.25 to one percentage point across various maturities effective from January 1, 2009. The maximum cut was in special deposits of 1,000 days, where the rate has been cut by one percentage point to 9%. For 3-5 years maturity, the deposit rate has been cut by 75 basis points to 8.5%.

Top bankers said the current spate of rate cuts was the outcome of a drastic fall in the rate of inflation as well as a series of concerted efforts by the government and the Reserve Bank of India to infuse liquidity into the economy. Over the past three months, RBI has not only pumped in large quantities of money into the economy but has also cut key policy rates.

The government, on its part, also infused Rs 4,000 crore into the housing sector through National Housing Bank (one of the reasons for LIC Housing Finance cutting its rates) and forced PSU banks to slash home loan rates for new loans of up to Rs 20 lakh.

The steps taken by the government and the RBI were also aimed at reviving the housing sector which is struggling because of the slowing economy.

Source : http://timesofindia.indiatimes.com/Business/India_Business/SBI_to_give_home_loans_for_as_low_as_9/articleshow/3867304.cms

Pre-payment penalty on home loans may go

NEW DELHI: Cash-rich borrowers of state-run banks could soon be able to repay their home loans either in part or full without facing any penalty, as  lenders consider a suggestion to waive pre-payment penalty for home loans of up to Rs 20 lakh.

At present, banks charge anywhere between 1% and 3% of outstanding loan amount as additional interest if a consumer wants to repay the loan amount before the initially agreed loan tenure.

“We are considering a proposal to either completely waive the pre-payment penalty or reduce it significantly,” said the chairman of one state-run bank, who asked not to be named.

The Indian Banks’ Association (IBA) is examining a proposal in this regard and may come out with specific guidelines in a few days. The IBA is also examining the possibility of bringing down or waiving the processing fee and lowering the requirement of margin money for small home loans.

All these steps are part of a government plan to revive the moribund housing sector. A revival in this sector could have positive spin-offs across various industries — notably cement and steel — and arrest the rising trend of job losses in the economy.

Banks may resort to doing away with pre-payment penalties in order to make more small home loans available to consumers at cheaper rates and relaxed norms. All these measures are in addition to rate cuts of up to 300 basis points being planned by state-run banks, which will take interest rates on loans up to Rs 20 lakh to between 8 and 10%.

“We are examining the possibility of waiving the processing fee and bringing down the requirement of margin money,” IBA chairman TS Narayanasamy told reporters in New Delhi after meeting chiefs of other banks and senior finance ministry officials including finance secretary Arun Ramanathan.

Mr Narayanasamy, who is also the chairman of Bank of India (BoI), said IBA would come out with specific package for home loans of up to Rs 5 lakh and those between Rs 5 lakh and Rs 20 lakh. The IBA is also finalising a similar package for loans to small and medium enterprises.
Source :http://economictimes.indiatimes.com/Personal_Finance/Loan_Centre/Prepayment_penalty_on_home_loans_may_go/articleshow/3825548.cms

Low-cost home loan package has frills

Mumbai, New Delhi: As banks begin to cut rates after of the announcement of fiscal and monetary packages by the government and RBI over the weekend, it emerges that the incentive package for low-cost homes includes an interest subsidy of 3% for loans of up to Rs 5 lakh.

This means that compared with the current benchmark prime-lending rate of around 13%, customers for low-cost homes would be able to borrow at around 10%. They will also be assured of a hedge against possible increases in interest rates of up to 2% in case of floating rate loans. UCO Bank CMD SK Goel told FE, “The rate of interest on these loans will not exceed 10%, which is 3.5% less than the current rates. Later on, we will announce a scheme for borrowers in the Rs 5-20 lakh category, where the rate of interest will be 11%.”

On Monday, public sector Union Bank cut its benchmark prime-lending rate from 13.25% to 12.50%, while HDFC Bank announced a 50-basis point cut effective in two tranches of 25 bps each, the first from December 15 and the second from January 1.

Said a senior SBI official, “Our bank’s asset-liability management committee will be meeting on Wednesday to take a call on interest rates.’’ Simultaneously, India Infrastructure Finance Company Ltd (IIFCL) is expected to issue Rs 10,000 crore in tax-free bonds in tranches until March 31. The interest rate on these bonds is expected to match that of ten-year government bond paper, which is close to 8%. The 2018 debt paper issued in November carried an interest rate of 8.24% and the yield on this bond closed at 6.69% on Monday.

The weekend stimulus package includes a reduction in repo and reverse repo rates by 100 basis points, along with special refinance packages of Rs 4,000 crore for housing and Rs 7,000 crore for SMEs, in addition to the support for IIFCL. Company CMD SS Kohli told FE the bonds may be offered to foreign investors as well.

“We are not putting any restrictions. Overseas investors would have to adhere to guidelines issued by Sebi,” he said. Sebi permits FIIs to buy up to $3 billion in corporate bonds a year. Kohli added that the Central Board of Direct Taxes is expected to give its approval to the bond issue in a few days. The finance ministry is expected to finalise the modalities of the bond issue TS Narayanasami, CMD, Bank of India, agreed that the packages announced by RBI and Centre would help stimulate growth. “Banks will come out with attractive packages for housing loans to be disbursed within the next two to three days. Customers will be induced to avail housing loans until June 30.”
 
Source : http://www.financialexpress.com/news/lowcost-home-loan-package-has-frills/396034/2

SBI organises loan mela

Srinagar, Nov 26: The loan mela, organized by the State Bank of India (SBI) here, received a good response with scores of customers visiting the mela on Wednesday.

According to SBI Regional Manager Ajay Gupta, the mela organized in the main branch at Residency road, aimed at making people aware of the facilities being provided by the bank to its customers.

However, the main objective of the mela, which was organized in collaboration with Jamkash Vehicleads Pvt Ltd, was to sanction spot car loan to customers.

The latest models of Maruti vehicles were also displayed at the mela site.
Gupta said besides car loan, the bank offers housing and other loans to its customers.

Gupta and the bank’s Chief Manager B L Jalali said the SBI was also offering complete financial services, including insurance, mutual fund and gold coins.

Jalali said conventional deposits and loan facilities for commerce; industry and agriculture are also available in the bank.
He said the bank pays 10.50 per cent interest on deposits for 1,000 days. However, for senior citizens the rate is 11 per cent.

Source : www.greaterkashmir.com

Invest in real estate by getting home loans in India

The loans that actually exist seem to be a far cry when a potential borrower is bound by the constraints of income. But, in reality procuring such loans is not that difficult as it seems.

Right after the green signal for cent percent FDI in the real estate sector from the Indian government there has been a sea change in this sector in India. As such, FDI in the real estate sector has gone up from 4.5% in 2003- 2004 to 16% in 2005-2006 and it has been increasing since then.

This liberalisation of the Indian economy has led to the emergence of many lenders in the country. As such, this trend has brought about a favourable change for the potential borrowers as well i.e. the changes in the payback terms and conditions. Moreover, with the application of the information and communication technology procuring a loan has become much easier. All these factors have led to the elimination of the time that was required earlier to procure a loan and the processing fee.

There are various types of businesses within the domain of Real Estate. A large number of people earn their living with such businesses associated with Real estate. Such businesses may be professional valuation services, mediator, broker etc., between two parties in the business pertaining to real estate. There are also businessmen who do construction works on a land and management of these constructions and the real estates. There are also professionals who deal with the sales and marketing of this sector.

In order to procure a home loan in India an employed borrower must furnish documents pertaining to employment status and the salary slips of around last six months. When the borrower is a self employed man, he is generally required to furnish a balance sheet, profit and last account of at least three years etc. Further, an individual must have attained 18 year of age, possess permanent residential proof like PAN card, Voter ID card etc. In addition, a bank statement would put a client on an advantageous position.

A home loan in India can be utilised to construct new building, reconstruct already existing building and for various other purposes pertaining to house construction. Such loans are available in two different forms which are secured and unsecured. When it is a secured loan the prospective borrower should pledge an asset as security against the loan sought. Due to the involvement of the security the rate of interest of secured loan many reasonably be less and the debtor may bear the loan for a longer period. The debtor may also be in an advantageous position to bargain for more loan amount. Similarly, this security puts the lender also at the advantageous position by lowering the risk on his part to lend loans.

On the contrary, when it is an unsecured loan the prospective debtor need not pledge any security. Thus he may not be in a position to bargain for himself. Owing to the insecurity the client may need to bear higher rate of interest and shorter repayment period. Moreover, the credit amount may also be relatively smaller.

Home loan in India is offered by a number of banks like Punjab National Bank, HDFC, SBI, ICICI. These banks deliver the loans at relatively easy EMIs and decrease the burden on the borrower to pay of the credit.

Home loans are also very helpful in purchasing real estate property in India. It is because the population of the country is more than hundred corers and purchasing a real estate property here is definitely a big deal since the majority of the population of the land are not sound enough to purchase a real estate without the support of home loan in the country.

Source : www.loftyvistas.com

Banks see home loan sales reviving

Bangalore: Bankers believe their strained home loan portfolios will see relief in the coming quarters, with interest rate cuts coming into force.

“We expect our home loan offtake to increase by 22 per cent y-o-y next quarter with the fall in interest rates,” said B.R. Pai, General Manager, Syndicate Bank. The bank, which has a Rs 6,500-crore home loan portfolio, saw a slower 18 per cent y-o-y growth in home loans disbursed last quarter, as compared to a 30 per cent growth for the same quarter last year.

Home loans will become cheaper as most public sector banks, including State Bank of India, Canara Bank and Syndicate Bank among others, have cut their benchmark prime lending rates (BPLR) by 75 basis points. Bankers are betting on buyers who had earlier postponed their purchases owing to a high interest rates to come on board.

Kumar Gera, chairman of the Confederation of Real Estate Developers’ Associations of India (Credai), said there is a pent up demand for residential property that will lead to a demand uptake once liquidity returns.

With property prices showing correction in recent times, bankers like C Abraham, General Manager of Union Bank, believe that more genuine buyers will come into the fold. This will see an uptake in home loan disbursals.

“Even Union Bank has been given a mandate by the board to make property purchases for housing our staff and for long term investment purposes.

Valuations are down considerably from ridiculously high levels,” he said. Union Bank has cut home loan rates by 50 basis points to 10.75 per cent. Vijaya Bank, which has seen a slower growth in its home loan portfolio, sees positive sentiment returning to the markets following RBI’s various actions to infuse liquidity. Albert Tauro, CMD, told DNA Money: “Demand waned for our home loans in the last few months. This is the right booster that we were looking for our home loan segment,” he said.

The bank has a Rs 4,000 crore home loan portfolio that grew by just 7 per cent last quarter. A.C. Mahajan, CMD, Canara Bank agrees that the home loan portfolio of banks, which have taken a beating will recover with demand coming in, from well-salaried employees who are risk averse. However, a high-ranking SBI official on condition of anonymity said that offtake of home loans in SBI may not see a huge rise.

SBI will still exercise caution under the tough economic conditions that are persisting, he said. “Loan applications of people from sectors like IT which are seeing layoffs are being more carefully scrutinised to avoid defaults,” the official said.

Source : Sify.com

Banks ready to cut home loan rates by Diwali

NEW DELHI: In what may come as a Diwali bonanza for creditworthy borrowers, many commercial banks are planning to cut home loan rates by about 50 basis points after RBI cut the repo rate on Monday.

The country’s largest lender, the State Bank of India (SBI), is likely to reduce retail home loan rates before Diwali while Punjab National Bank (PNB) and Union Bank of India (UBI) have already slashed rates by up to 50 basis points. But the rate cut of 50 basis points may not be applicable to all types of loans.

Although private home loan providers like HDFC and ICICI are planning to wait and watch as of now, a rate cut by market leader, the SBI, often has a ripple effect on many banks. UBI has cut rates by 50 basis points for loans up to Rs 30 lakh.

The rate cut for loans above Rs 30 lakh, however, will be only 25 basis points. Also, there is the possibility that for loans amounting to Rs 75 lakh and above, the rate cut may be even lower. Sources say some banks may even decide against cutting rates for loans above Rs 75 lakh.

Many banks, including SBI, have put a new ceiling of home loans above Rs 75 lakh; they prescribe a different rate structure for these loans. The government, however, recognises only two types of home loans, those below and above Rs 30 lakh. The former comes under priority sector lending. Also, rate cuts would not be applicable to commercial borrowers like real estate companies.

“Our bank is contemplating a rate cut following the recent measures taken by the Reserve Bank. Though the decision to reduce rates may come at any point in time, it’s expected that the bank would take a decision after seeing RBI’s half-yearly monitory policy on October 24,” an SBI official said.

Banks are also following some tough norms. He said the bank is following stringent norms for deciding an individual’s creditworthiness while allocating loans so that the bank does not fall into a subprime-like trap.

Finance ministry sources said the government is in constant touch with commercial banks to ensure easy liquidity for priority sector loans.

“The government and the central bank have taken a series of measures to infuse liquidity into the system and there is no reason that the banks should be wary of providing credit to genuine borrowers even after that,” an official said.

Economictimes

SBI hikes Interest Rates on Home Loans

Home loans from public sector State Bank of India would be dearer as the lender has decided to hike interest rates by 50 basis points on all credit linked to prime lending rates.

Speaking at a function in Ghaziabad on Monday, State Bank Chairman-cum-Managing Director O P Bhatt said the bank has decided to raise the interest rate by 0.5 per cent on all loans such as home loans and auto loans which are linked to PLR.

The revision in PLR came after SBI raised its PLR from 12.25 per cent to 12.75 per cent last week following Reserve Bank’s increasing its key short-term lending rate to banks and the mandatory cash deposits that banks need to keep with the apex bank (CRR) by 0.5 per cent each.

Referring to the impact on bank’s profit margins, Bhatt he hoped to maintain the net interest margin at 3 per cent this fiscal.

SBI had earlier announced to hike interest rate on fixed deposit rates by up to 75 basis points effective from June 30.

State Bank of India in which government has about 60 per cent stake is targeting 40 per cent growth in non-interest income in 2008-09, compared to 28 per cent last fiscal.

The bank had lowered its PLR twice in February to 12.25 per cent but decided to raise by 50 basis points last week.

“The net profit of the bank is likely to be affected next quarter though there is not much on first quarter profits ending today,” he said.

He also indicated the bank is expected to set aside at least 10 billion dollars (232.8 million) to provide for depreciation in its treasury portfolio as interest rate rise.

Home Loans may become Costlier as RBI raises Repo Rate

Consumer, home loan, auto and other loans could become costlier with the Reserve Bank today hiking its short-term lending rate to banks by 0.25 per cent to 8 per cent in the face of surging inflation.

Announcing the increase from 7.75 per cent, the central bank said the decision was taken to contain inflationary expectations as the rate of rise in prices touched a 45-month high of 8.24 per cent.

The inflation, analysts said, is expected to climb over nine per cent once hike in petroleum prices gets reflected in the official wholesale price index.

The move to increase repo rate, at which the central bank gives short term money to banks in exchange of government securities, has been taken for first time this fiscal.

It had earlier been trying to contain inflation by raising cash reserve ratio– the mandatory deposits that banks keep with RBI.

Commenting on RBI decision Punjab National Bank Chairman K C Chakrabarty said, “All interest rates would be affected. We will take decision by month end. It (the move) will increase the cost of resources.”

Country’s largest lender SBI said it would examine lending and deposit rates on Friday.

Real estate company Unitech said home loan rates may rise after the Reserve Bank’s step.

The reverse repo rate, at which RBI borrows money from banks in exchange of the government papers, however, remained intact at six per cent.

HDFC Bank Chief Economist Abheek Barua said,” This (repo rate hike) will have an implication on the bank’s lending rates. I think the Prime Lending Rates of the banks will go up by about 50 basis points. There would also be a revision of bank’s deposit rates.”

SBI will offer reverse mortgage products

The State Bank of India (SBI) will start offering reverse mortgage products for senior citizen on October 12, 2007. Joint loans will be given if the spouse is alive and is over 58 years of age.

The loan will be offered by all branches of SBI from October 12, 2007. The loan will be offered at an interest rate of 10.75% pa and is subject to change at the end of every five years along with revaluation of security. Every five years, bank may even re-adjust the loan installments, if it is needed, depending on market conditions and loan status.

The Chief General Manager for Personal Banking (SBI), Mr. Sangeet Shukla told that there is no upper limit of amount of loan. Also, the maximum period for availing this benefit is 15 years.

Under this loan, borrowers can be avail payment against the security of their houses on monthly or quarter installments or either he or she can go for as a lump sum payment at the beginning.

During their lifetime, the borrower does not have to pay the loan and will continue to stay in their house. Thereafter, either the legal heirs can repay the loan and redeem the property but if this option is not exercised, bank will sell the property and liquidate the loan. Surplus, if any, will be passed on to the legal heirs.

DHFL and Punjab National Bank are the other competitors along with the SBI. Reverse mortgage is very popular product in many countries. The scheme offers old persons with less income to offer their house as mortgage security. The old person will get a loan from the bank and the bank will keep on paying them for a fixed period.

After the time of loan is over, the bank may either, acquire the property and give the remainder to the customer’ heirs or they can pay back and keep the property. The scheme is very good for some people looking for additional money to support their needs at old age.

Source: www.topnews.in