SBI announce fresh offers in the housing finance segment

The State Bank of India announced fresh volley in the housing finance segment in which it has capped the interest rate at 8 per cent for five years loans of up to Rs 5 lakh.

The bank stated it will offer 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. Recently SBI has become aggressive in the highly competitive home loan market, which was earlier dominated by HDFC.

Currently HDFC is offering 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, bank is offering 9% and 9.50% for 20-year tenure respectively.

Currently SBI’s home loan offers are the cheapest one in the market.

Earlier in February SBI announcement had astonished the market when it capped the interest rate on all home loans at 8% in the first year. It made the offer more attractive in June when it set a Rs 30 lakh cap for its Easy Home Loan Scheme, under which it fixed interest rates at 8% in the first year and 9% in the second and third years.

Latest SBI has announced a three-month long “SBI My Home Campaign” from August 8 to make easy for home buyers during the forthcoming festival season. The bank stated no processing fees will be charged on home loans.

Thus the individuals can take loan up to Rs 5 lakh under SBI Hi-Five Home Loan at an interest rate of 8% for a period of five years. Therefore the customer gets an option to choose between 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. However the SBAR is the bank’s benchmark rate and stands at 12.25 per cent.

The borrowers who take home loans up to Rs 50 lakh will get an option that at the end of three years they can 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. But the tenure for these loans can stretch up to 25 years.

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

He added, “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”.

Nandkumaran informed that home loan sanctions have jumped to Rs 2,100 crore a month from Rs 1,500 crore since its offer of 8 per cent interest rate scheme. He said, “We expect a much better response from this scheme”.

According to analysts although the SBI home loan segment has seen rise in the share over the past six months, but HDFC still continues to be the leader. At present SBI’s market share in the home loan market stands to be a little over 20 per cent. Though the current figures of the country’s largest home loan financier HDFC is not known but the corporation, during the fiscal year ended March 31 had market share of 40%.

SBI auto, home loans registered growth of 22% by June end

State Bank of India, during the last one year has witnessed a considerable increase in its retail loan portfolio. Between July 2008 and June 2009 the total retail advances increased by 22.52 per cent which amounted to Rs 112,862 crore.

There has been fastest growth on a year-on-year basis in the education loan segment among the various retail loan portfolios, while auto loans increased by 29.05 per cent and home loan registered a growth of 24.00 per cent on a year-on-year basis.

Bank education loan portfolio registered a growth of Rs 7,162 crore by the end of 2009 as against Rs 5,099 crore in the same period previous year which means a 40% increase in the portfolio.

In India SBI is the largest education loan provider and by the end of March 2009, it had approximately disbursed 24% of the total education loan distributed by all public sector banks put together.

The figures were made public in quarterly report of the bank released on Thursday.

In case of auto loan portfolio by June 30, 2009 the bank had distributed loans amounting to Rs 10,399 crore as against total auto loans of Rs 8,059 crore in the previous year, thus attaining the growth of 29.05 per cent, the highest among all banks.

To increase its market share in the auto loan portfolio SBI this year had launched a special auto loan scheme called SBI Ezee car loans, under which the bank offered 8% per interest for the first year.

While the home loan portfolio registered a growth of 24.00 per cent on a year-on-year basis. The bank by June 30, 2009 had distributed home loan amounting to Rs 57,513 crore as comparison to Rs 46,370 crore previous year.

Earlier this year SBI had introduced a special home loan scheme under which it offered loans at 8% in the first year.

Thus SBI maintains that it has been the fastest growing home loan provider during the first quarter of the present financial year.

Personal loans also come under retail loans but bank did not provide separate figures for this segment.