SBI To Spare Subsisting Home Loan Customers

State Bank of IndiaState Bank of India (SBI) will not increase interest rates for a range of existing home and education loan customers’.

Even as the shift may be partially influenced by the earlier finance ministry recommendation that banks should not rush through rate increases.

The banks’ asset liability committee (Alco) that gathered on late Thursday evening, has suggested to the bank panel that the standard prime-lending rate (PLR) may be hiked up by 50-75 basis points. At this time, the bank’s PLR is 12.25%.

Alco has also considered that lending rates should be brought up for all new home as well as education loan customers. There should be no rate increase for loans beneath Rs 15 lakh and Rs 4 lakh, correspondingly. The majority of home and education loans are under these levels.

The shift contemplates that interest rates may be arriving at a threshold point, further than which households may find it difficult to manage a higher monthly outgo.

An analyst said, “As far as new customers are considered, they can take a call on whether they would like to borrow at high rates. But the existing ones will find the going tough, and this could give rise to loan delinquencies.”

But Alco has not recommended any enhancement in depository rates. The bank’s executive board will assemble on Saturday to take concluding decision on the lending rates.

For home loans up to five years, the bank charges up a floating interest rate of 10.25% and 10.75% for loans up to 20 years. The fixed-rate home loan is nailed down at 12.25%.

Home loan rates have climbed by 2-3 percentage points in the last one-year. On the other hand, HDFC’s floating rates have increased from 9% in May 2006 to 11.25% now. ICICI Bank has raised its floating home loan rates to 12%.