India's leading bank, SBI ( State Bank of India) took the second major step in the last 3 months to draw housing loan customers from rivals, cutting by 50% the processing fee on loans when competitors were contemplating to raise it to offset losses on waiver of pre-payment penalty.
SBI has halved the processing fee to Rs. 10,000 on housing loan of above Rs. 75 lakh. For loans in the Rs. 30 lakh to Rs. 75 lakh range, the fee will be Rs. 6,500, down from Rs. 10,000. For loans below Rs. 30 lakh, the prevailing rate of 0.25% has been retained. The new charges will be effective from January 11, 2012
Private sector banks Axis Bank & ICICI Bank charge 0.5% as processing fee irrespective of the loan amount while housing finance leader HDFC charges 0.50% of the loan amount, with a cap of Rs.10,000.
So, on a loan of Rs. 50 lakh, for instance, SBI’s processing fee would be Rs. 6,500 as against Rs. 25,000 charged by ICICI Bank and Axis Bank and Rs. 10,000 by HDFC.
But private banks at this point say that with the loss of revenues due to pre payment penalty waiver, there is little chance of the fee going down and that it is only likely to go up.
Mr. Jairam Sridharan, Head - Consumer lending and payments, Axis Bank said “In an environment where all banks are moving towards zero prepayment charges, we believe processing fee in the industry would tend to rise over a period of time. Also, the waiver of pre-payment penalty will only encourage customers to pre pay more loans, more frequently. Therefore, it is not sustainable to have a lower processing fee”
Src: ET
SBI has halved the processing fee to Rs. 10,000 on housing loan of above Rs. 75 lakh. For loans in the Rs. 30 lakh to Rs. 75 lakh range, the fee will be Rs. 6,500, down from Rs. 10,000. For loans below Rs. 30 lakh, the prevailing rate of 0.25% has been retained. The new charges will be effective from January 11, 2012
Private sector banks Axis Bank & ICICI Bank charge 0.5% as processing fee irrespective of the loan amount while housing finance leader HDFC charges 0.50% of the loan amount, with a cap of Rs.10,000.
So, on a loan of Rs. 50 lakh, for instance, SBI’s processing fee would be Rs. 6,500 as against Rs. 25,000 charged by ICICI Bank and Axis Bank and Rs. 10,000 by HDFC.
But private banks at this point say that with the loss of revenues due to pre payment penalty waiver, there is little chance of the fee going down and that it is only likely to go up.
Mr. Jairam Sridharan, Head - Consumer lending and payments, Axis Bank said “In an environment where all banks are moving towards zero prepayment charges, we believe processing fee in the industry would tend to rise over a period of time. Also, the waiver of pre-payment penalty will only encourage customers to pre pay more loans, more frequently. Therefore, it is not sustainable to have a lower processing fee”
Src: ET
No comments:
Post a Comment