Sbi Chief Hints At Home Loan Rate Cut

State Bank of India (SBI) chairman Janki Ballabh today hinted at a further cut in home loan rates. "Much depends on the availability of funds and our ability to reduce deposit and transaction costs. Then we will be able to pass on the benefit to customers," he said.

Ballabh said there were good signs of credit offtake since the beginning of the fiscal, and the bank will meet its targeted 16 per cent growth in incremental credit.

With the reduction in cost of funds, SBI has experienced a better net interest margin this fiscal despite the reduction in interest rates, Ballabh said. Ballabh said the first five months have shown a positive growth rate of a little less than 5 per cent in incremental credit, amounting to over Rs 3,000 crore.

 

"Last year, there was a decline in our loan portfolio," Ballabh said. Growth has come from all segments, he said, including corporate and retail loans. Of the total incremental growth, 50 per cent accounts from disbursal of housing loans.

Against a targeted incremental credit offtake of Rs 18,000-20,000 crore this fiscal, the retail book will contribute Rs 7,000 crore, of which Rs 4,500 crore will come from home loans.

Housing loan is a very critical thrust area for the bank, which has thus far disbursed Rs 1,500 crore to date during the fiscal. "We have completed one-third of our housing loan target of Rs 4,500 crore for the year," Ballabh said.

Speaking on the sidelines of SBI Life Insurance Company's launch of two new products, Ballabh said that while existing rates are realistic, they have not bottomed out. He was responding to whether further cuts in home loans were expected in light of the recent bout of cuts in interest rates by the housing finance industry, triggered by SBI's initiative.