SBI home loan tweak limits base rate gain

Mumbai, Oct. 4 (PTI): The State Bank of India (SBI) may have cut its base lending rate by 40 basis points to 9.3 per cent following the Reserve Bank's latest policy rate cut, but home loan customers of the top lender will have to pay up to 0.7 per cent above the base rate.

Accordingly, the actual reduction in home loan rates will be a maximum of only 20 basis points, while a higher margin above the base rate will mean that customers will have to pay the same rate of interest on home loans above Rs 1 crore.

The SBI was among the first to announce a reduction in rates after the RBI announced a 50-basis-point reduction in its policy rate last week.

The bank lowered its minimum lending rate, or the base rate, by 40 basis points - the highest for any lender so far - from 9.7 per cent to 9.3 per cent with effect from October 5, that is tomorrow.

However, according to its latest circular, dated October 3, women home loan customers would be charged 20 basis points above the revised base rate, resulting in an actual interest rate of 9.5 per cent from tomorrow - down by only 20 basis points from the existing rate of 9.7 per cent.

Other customers, who were being charged 9.75 per cent, would have to pay 25 basis points above the current base rate, or 9.55 per cent, resulting in an actual reduction of 20 basis points.

For Maxgain home loans for amount more than Rs 1 crore, the SBI was till today charging 25 basis points above the base rate, or 9.95 per cent, from women customers and 30 basis points over and above the base rate, or 10 per cent, from others.

This rate will come down to only 9.75 per cent for women customers as the mark-up has been increased to 45 basis points over the base rate.

The rate for other customers in this category would come down to only 9.8 per cent as the margin has gone up to 50 basis points.

The rate for women customers in the CRE (commercial real estate) Maxgain category would be 65 basis points above the base rate, or 9.95 per cent. The rate for other customers in this category would be 10 per cent or 70 basis points over the base rate. Hence, it would remain unchanged despite a reduction of 40 basis points in the bank's base rate.

State Bank of India