SBI Reduces Home Loan to 9.1%, Lowest in 6 years

Economy - Pavan Pandey - Nov 17,2016

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sbi reduces home loan to 91 percent lowest in 6 years

India’s largest bank, State Bank of India, has cut the home loan rates to a 9.1%. This is one of the lowest loan cut rate in last six years by a government bank. This cuts in home loan rates is part of the festive scheme of State Bank of India. According to a report, ‘home loan for women (or loans with women as co-borrowers) will be available for 20 BPS (Basis points) above the scale rate, which will be 9.1 percent and for all other debtors, the home loan will be available at 9.15 percent. This new loan rates will be valid for loans authorized in November and December 2016. Separately from the cut in the loan rate, SBI has also abandoned all processing fees. 

Recently, SBI announced a drop in its lending rates under a new system of reckoning, indicating a further incline in borrowing charges ahead of the busy term, by following the Reserve Bank of India rate cut in lending charges.  According to the SBI Managing Director Mr. Rajnish Kumar, “The rate cut will bring down the equated monthly installment on a Rs. 50-lakh loan by Rs. 542 per month. Since March, the EMI has come down by over Rs. 1,500.” With the help of this festive shceme reduction, SBI’s inexpensive home loan are now 20bps and it is too lower than the HDFC Bank and ICICI Bank’s low-cost home loan rate of 9.3%. 

SBI's benchmark ratio is the one-year MCLR (Marginal Cost of Lending Rate), it has been operational for the month April this year and the MCLR will be revised every month for new borrowers. State Bank of India is also aiming the union of other five banks, it includes State Bank of Patiala (SBP), State Bank of Mysore (SBM), State Bank of Jaipur and Bikaner (SBBJ), State Bank of Hyderabad (SBH) and State Bank of Travancore (SBT) in year ending March 2017. These lower home loan rates reduce the margins of SBI, which help the bank in organizing properties which are supporting as bank deposits.