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SBI plans to reset interest rates news
Our Banking Bureau
19 January 2002
Mumbai: 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 competitors.

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.


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SBI plans to reset interest rates