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| SBI, ICICI home loan rates even out eventually: Kochhar |
| Press Trust of India / New Delhi Aug 23, 2009, 14:49 IST |
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Wondering if State Bank of India (SBI) can steal a march with a low-interest home loan strategy, ICICI Bank today said the effective rate offered by the public and private bank was the same and claimed it was much faster in serving customers.
"I would actually say that when one talks of interest rates, one should look at effective rate over the life of the loan and not just the first year and second year and third year... Actually the rates are not very different between the public sector and private sector players," ICICI Bank CEO and Managing Director Chanda Kochhar told PTI.
To questions on SBI's aggressive strategy of pricing home loans low and how ICICI Bank would respond, she said the current economic scenario does not warrant aggression.
Earlier this month, SBI launched a new home loan scheme offering loans at eight per cent for 1-5 years, depending on the amount, with zero processing fee, as against an average of about 10 per cent charged by others.
"I would only say that on quarter on quarter you should look at the actual disbursement (of home loans by SBI and ICICI Bank)... If you compare private sector disbursement to the public sector bank, you would get (the picture)," she said on whether SBI has a better sales pitch on this front.
However, she said she would not like to talk about any particular bank and that home loan would be a major focus area for her organisation, which offers a "much faster turnaround on the entire home loan".
"If you have finalised a house; if you must go ahead. In terms of speedy turnaround, you would get it fastest. That is the reason customers to come to us. But they would not come if the interest rates are very high," Kochhar retorted when asked why would customers not rush to SBI for cheaper credit.
She debunked suggestions that it was not passing on the benefit of floating rates to home loan customers, saying that in just six months or even less ICICI Bank cut its prime lending rate (PLR) as many times as its public sector rivals.
"Three times we reduced PLR and effective reduction was 150 basis points... The customers have seen that. In fact, in the month of June we almost did two corrections in a very short interval... In June, we were the first bank to start (rate) cuts, many banks did it much later in July," she added.
On why new home loan seekers are offered better rates, Kochhar said, "The new loan taker gets (rates) prevailing at that time. It is the same thing as deposit... The new deposits get the current rate, the old deposits are linked to old interest rates."
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