The State Bank of India (SBI) has taken the
battle for market share in the home loan market to the doors of leaders - HDFC
and ICICI Bank -offering a total processing fee waiver for shifting to it from
other lenders, said a person familiar with the move.
State Bank of India, which is no exception to the
slowdown in demand for loans from corporates, moves to establish its
credentials as a serious retail player as it already offers the lowest rates on
mortgages. But the bank's continued charge of legal and valuation fee of as
much as Rs. 8,000 could limit the gains.`
“We want to offer the best combination in terms
rates and charges,“ said an SBI official who did not want to be identified.
“Already , the pre-payment penalty is banned and
our rates are lowest, so we have decided to waive the processing fee.“
Housing loans is the oasis for bankers who are
facing a severe slowdown in demand from corporates.
For the state run banks which are not significant
lenders in the credit card, or other unsecured loans business for retail
borrowers, home loans remain the only segment which can keep them going.The
secured nature of the product and the low rate of defaults makes it the best
for PSU banks saddled with tons of bad loans from poor corporate lending.
SBI's housing loan rates are the lowest among all
lenders at 9.70% for women borrowers and 9.75% for others, irrespective of the
loan amount.
ICICI Bank charges 9.85% for loans up to Rs. 30
lakh and 9.95% for loans between Rs. 75 lakh.
HDFC charges 9.85% for women and 9.90% for others
irrespective of the loan amount.
After the RBI banned pre-payment penalty on
floating rate housing loans, banks across the board have seen a sharp rise in
customers moving from one bank to another in search of better rates.
For SBI, about 10% of its incremental loan is on
account of migration from other banks or / housing finance companies (HFCs).
SBI's home loan book stood at Rs. 1.59 lakh crore, which is 15% of their total
loan book.
However, new borrowers seeking a home loan would
be charged 0.5% of the loan amount, or Rs. 10,000, whichever is less. While
HDFC has not waived off processing fee for borrowers, its fee is inclusive of
legal and valuation fee.
Bid to push home loans amid slack corp demand;
but bank's legal charge may limit gains.
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