SBI cuts home loan rates by 15 bps, does away with loan slabs

The State Bank of India (SBI), the country's largest lender, today announced a reduction in interest rate on home loans by up to 15 basis points and a rationalisation of its home loan slabs from two to one, bringing in a uniform interest rate structure.

The bank offers home loans under two categories - for women and for others.

Effective today, the rate of interest for women is 10.10 per cent and for others it is 10.15 per cent. The bank has also done away with the two different slabs for interest calculation.

Earlier, the home loans were offered under two slabs - less that Rs75 lakh (interest rate: women 10.10 per cent and others 10.15 per cent) and above Rs75 lakh (women 10.25 per cent and others 10.30 per cent).

Now the bank has scrapped the 'above Rs75 lakh' category.

The rate cut has come ahead of the festive season and with the top lender deciding on rationalising the home loan slabs and the interest rates, other banks are expected to follow suit.

Also, with the residential segment of the real estate industry on an uptick in cities like Chennai, Bangalore, Pune, Mumbai, Hyderabad and those in the National Capital Region (NCR), prices have also jumped to levels around crores of rupees.

The rate cut will, in effect, benefit only those who borrow over Rs75 lakh since SBI is already lending at 10.15 per cent for loans up to Rs75 lakh at 10.15 per cent.

The move is also irrespective of RBI keeping short-term lending rate unchanged at 8 per cent and cash reserve ratio (CRR) at 4 per cent citing upside risks to inflation in view of uncertain monsoon and its impact on food production as also volatile international oil prices.

RBI, however, reduced SLR for banks by 0.50 per cent to 22 per cent with effect from the fortnight effective 9 August.