State Bank of India might extend its special home loan scheme further. Recently the bank had extended its special home loan scheme up till June 30, 2010. Sources said that the bank's decision to further extend the scheme will depend on its liquidity condition. As on March 31, 2010, surplus liquidity of the bank was Rs 40,000 crore.
Under the special home loan scheme SBI is offering loans at 8% interest for the first year and 8.5 per cent for the second and third years. After this period it becomes a floating rate depending on the prevailing interest rates.
Mr R. Sridharan, Managing Director and Group Executive (Associates and Subsidiaries), SBI said, “We are sitting on surplus liquidity at present, lending at eight per cent would make more sense than parking the funds in reverse repo, which will fetch us only about 3-3.5 per cent. We will review the need for extending the scheme further based on our liquidity position.”
Last year when bank launched the scheme, it was for three months in August 2009 as a festival offer for home buyers thereafter the scheme was extended up till March 31, 2010. Then again it has been extended to June 30, 2010.
Under the scheme loans up to Rs 50 lakh and tenure of 25 years were offered at 8 per cent interest rate during first year and 8.5 per cent fixed during the second and third year.
After three years, interest rate is calculated at 2.75 per cent below SBAR (for floating rate) and 1.25 per cent below SBAR with a reset frequency of five years.
However for loans above Rs 50 lakh bank offers interest rate of 8% for first year and 9% for the second and third year.
Mr Sridharan said, the special scheme did not have any negative affect on bank net interest margin (NIM) and added, “It has only had a positive impact on our margins.”
In fact by the end of quarter on March 31, 2010, bank’s NIM had improved at 2.96% as against 2.39% during the corresponding period last year.
The bank’s home loan has increase by about 32 per cent at Rs 71,193 crore as on March 31, 2010, against Rs 54,063 crore during the year ago period.
During the announcement of the bank’s annual performance report Mr S.K. Bhattacharya, Managing Director, SBI told that more than 95 per cent of customers (in rural, semi urban and urban areas) were first time home buyers.
Earlier bank sanctioned around 14,400 loans ever month in February 2009 after the launch of this scheme bank had witnessed 50 per cent increase in average home loan sanctions, to 22,000 in September 2009.
Last year, when SBI launched its ‘teaser rates’ other lenders were forced to launch the similar products.
But when RBI showed concern over the teaser rate schemes other banks withdrew the scheme in March, but SBI extended its scheme. HDFC also followed the suit and extended its teaser rate home loan scheme till June 30.
Under its special scheme HDFC bank offered fixed rate of 8.25 per cent up to March 2011, nine per cent for the next one year thereafter it becomes the floating rate depending up on the prevailing rate. Although scheme had expired last month but now it has been extended till June 30, 2010.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment