The State Bank of
India (SBI) has decided to reset interest rates on its existing
housing loans as a one-time exercise on a case-to-case basis. The
decision has been made to thwart the takeover attempts by its
Earlier this fiscal, the
rates were reduced to 12.5 per cent from 13 per cent. In September
2001, the rates were reduced to 12 per cent and later to 11.5 per
cent in the beginning of the current year.
The bank offers both
fixed and floating rate loans. But a borrower cannot convert a
fixed rate loan to a floating rate loan and vice versa. The bank
has clarified that floating rate loans once reset at the current
rate will not automatically be eligible for future reductions. A
fixed rate loan, however, will be re-fixed at the current rate and
no further reductions will be available.
SBI has also issued
several modifications to the existing instructions on housing
loans. It has decided to extend two loans to the same individual
for furnishings/consumer durables, which forms part of the project
cost. The two loans could be availed of at different times, either
for purchase or construction and subsequent repair or renovation
of a single property or two different properties.
Where the loan is availed for furnishings and consumer durables
and the check-off facility is available, the maximum amount
available has been raised to 10 per cent of the project cost or Rs
3 lakh, whichever is lower, from 5 per cent of the project cost or
Rs 2 lakh.