SBI, PNB cut interest rates on home loans
Prior to this change, SBI charged 10.15% for loans up to `75 lakh and 10.3% for loans above `75 lakh
Mumbai: State Bank of India (SBI) on Tuesday cut interest rates on home loans to 10.15% for all loan brackets, with immediate effect. For women borrowers, the interest rate for all home loans will be a uniform 10.1%, India’s largest lender said in a statement.
Prior to this change, SBI charged 10.15% for loans up to ₹ 75 lakh and 10.3% for loans above ₹ 75 lakh. For women borrowers, these rates were 10.1% and 10.25%, respectively.
SBI’s home loan portfolio on 30 June stood at ₹ 1.44 trillion, up 15.6% from ₹ 1.25 trillion a year ago. Home loans contributed 14.3% of the bank’s domestic loan book at the end of the April-June quarter.
While other lenders are yet to take a call, New Delhi-based Punjab National Bank (PNB), too, reduced interest rates on home and auto loans with immediate effect as part of its festival offer. PNB is offering home loans up to ₹ 2 crore at an interest rate of 10.25%, which is also the bank’s base rate. For home loans above ₹ 2 crore, the interest rate being levied is 10.5%, PNB said in a statement. The bank has slashed the interest rate for two-wheeler loans by 150 basis points (bps) to 12.25%, while introducing a new category of borrowers with a high credit rating who will be offered a floating rate of 10.5% on car loans. A basis point is a hundredth of a percentage point.
Housing Development Finance Corp. Ltd (HDFC), India’s largest mortgage financier, is yet to make any changes to its interest rates, a spokesperson for the company said.
“We will discuss whether we need to cut our lending rates in our asset and liabilities committee meeting on Wednesday. We do not see interest rates coming down in the system," said T.M. Bhasin, chairman and managing director, Indian Bank.
The cuts in lending rate come after the Reserve Bank of India (RBI), in its monetary policy announcement on 5 August, decided to keep its repurchase rate unchanged, but reduced the statutory liquidity ratio (SLR), or the portion of deposits that banks must invest in government bonds, by half a percentage point to 22% to free up funds for lending when credit growth picks up.
The reduction in SLR will free up about ₹ 40,000 crore in the banking system, given its total deposit base of about ₹ 80 trillion.
Liquidity in the system has also improved as demand for credit remains weak while deposits have been growing at a steady pace. Non-food credit for the fortnight ended 8 August stood at ₹ 60,20,406 crore, up 11.9% from ₹ 53,81,427 crore a year ago. Deposits during the fortnight stood at ₹ 80,57,939 crore, up 13.8% from ₹ 70,76,290 crore in the previous year.
“Even though policy rates are where they are, interest rates on assets have come down because there is more supply than demand. So there is a downward pressure on rates in the banking system at this point in time. Spreads have come down across the board from consumer to corporate," Aditya Puri, managing director and chief executive officer, HDFC Bank Ltd. had said in an interview on 19 August.
In May, India’s largest private sector bank ICICI Bank Ltd had cut its home loan rates by 10-15 bps.
SBI had last reduced its home loan rates in December, when it cut its interest rates by 15-25 bps, giving an additional 5 basis points discount to women borrowers. During the same time, HDFC, too, had announced a 25 bps cut on interest rates for loans between ₹ 30 lakh and ₹ 75 lakh. On Tuesday, SBI shares fell 0.64% to ₹ 2,493.15 on BSE.
Remya Nair in New Delhi contributed to this story.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!