SBI to charge processing fees for home loans
11 October 2019
State Bank of India (SBI) will start charging processing fees for home loan borrowers, top-up plans, and loans to corporates and builders. This decision follows a sharp reduction in its interest income after banks started linking lending rates to Reserve Bank’s repo rates.
SBI, in an internal circular, said, "the full waiver of consolidated processing fee" offered during the festival period for loan proposals sourced up to 31 December 2019 is withdrawn. "Waiver will continue for proposals sourced up to 15 October 2019," SBI said.
"On 1 July 2019, SBI linked its lending rate to the benchmark repo rate. Before this, SBI was offering the lowest rate in the market. After the decision to link, the rates came down sharply," a source said.
On July 1, SBI had launched a software for automatically pegging home loans to the dynamic moving rate. It was rolled back on 1 August 2019. Following internal discussions that other charges should be levied to compensate for the low loan rate, SBI again rolled out its lending software on 1 October (in essence pegging loans to the benchmark rate).
Others such as prepayment charges, Central Registry of Securitisation Asset Reconstruction and Security Interest registration fee might be increased later. "Processing fee would be at around 0.4 per cent. And would be within the Rs10,000-30,000 (minimum-maximum) range for individual borrowers. For builders, a flat charge of Rs5,000 has been reintroduced," reports said.