The decision of the State Bank of India, country’s biggest bank, to slash interest rates on housing loans up to 0.15 per cent and remove the slabs for advances ahead of festive Diwali season has brought cheers to many aspiring home buyers.
Besides SBI, HDFC has also reduced interest rates on loans above Rs. 75 lakh to 10.15 per cent.
As per SBI, home loan of any amount would now be available at 10.15 per cent whereas for women borrowers, the rate of interest would be 10.10 per cent. The base rate, or the minimum lending rate below which the bank cannot lend, is 10 per cent. SBI has also now removed two home loan slabs – under Rs. 75 lakh and above Rs. 75 lakh.
SBI has now decided to offer uniform interest rate on home loans with effect from August 26, irrespective of the loan amount.
The background for these decisions was prepared by RBI in its June and August reviews of monetary policy, the Reserve Bank of India (RBI) kept short-term lending rate unchanged at 8 per cent, while the cash reserve ratio (CRR) was kept 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.
Subsequently, the bank rate was retained at 9 per cent.
In order to infuse additional liquidity, the RBI decreased SLR for banks by 0.50 per cent to 22 per cent with effect from the fortnight beginning August 9. A similar move in June had released an additional Rs. 40,000 crore into the system.
It is expected that SBI and HDFC’s latest move will infuse healthy competition in housing loan segment and inspire other government and private sector banks to reduce their interest rates too.
Despite conservative monetary policy of RBI, the encouraging steps by these two banks are certainly indicative of renewed confidence of banking community in the sustainability and inherent strength of the Indian economy.
The Chairman of Unnati Fortune Group Mr Anil Mithas has welcomed SBI and HDFC’s move to reduce interest rates on housing loans. He expressed hope that other banks will also follow suit. Mr Mithas said that his Group is planning a big bonanza for home buyers this Diwali season and this decision will certainly act as an icing on the cake.
Mr Mithas said that although Western and Indian economies can’t be compared directly due to large scale differences in terms of basic regulatory laws, operational concepts, historical perspectives and sheer scale, but as a nation India also must strive to bring down interest rates on housing loans to international levels.
He said in America interest rates vary between 3-5 per cent and in England between 1.5 – 5 per cent which is almost one tenth to half of Indian interest rates.
Mr Mithas said that the Modi government has promised to provide shelter to every family by 2022. If that target has to be achieved, then interest rates on housing loans must be brought down further. He said that as against fears of drought, monsoon has been fairly satisfactory; it will certainly bring down inflation and encourage the government to embark on a growth trajectory thereby reducing interest rates further.
Source- http://www.unnatifortune.com/
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