The country’s largest lender State Bank of India (SBI) on Wednesday came out with its new repo-linked home loan scheme. The bank said that it will charge a 265 basis point (bp) spread over the Reserve Bank of India’s (RBI) repo rate on new home loans from October 1.
The repo rate at 5.4 per cent and the 265 bps spread takes the external benchmark rate (EBR) to 8.05 per cent. On top of this, SBI will charge a premium of 15 bps thereby taking the interest charged on a home loan of up to Rs 30 lakh to 8.2 per cent for salaried borrowers.
For home loans between Rs 30 lakh and Rs 75 lakh, SBI will charge a premium of 40 bps, thereby taking the effective rate for salaried people to 8.45 per cent.
Similarly, for loans above Rs 75 lakh, the premium charged by SBI over and above the spread of 265 bps is 50 bps over EBR and the effective rate comes to 8.55 per cent.
SBI also said that a 5 bps concession will be given to women borrowers under each category of loans.
Over and above the effective rate, a 15 bps premium will be charged by the bank for non-salaried customers. The bank will also add a 10 bps premium to the card rate for loans up to Rs 30 lakh if the loan to value ratio of the customer is greater than 80 per cent and less than 90 per cent.
The lender also said that if the customer falls in the risk grade of 4 to 6, a premium of 10 bps will be added to the card rate.
SBI, this week, said it will use the repo rate as the external benchmark to price all new floating rate loans for micro, small and medium enterprises (MSMEs), housing and retail loans and medium-size enterprises from October 1, 2019.
SBI had earlier introduced a repo-linked home loan effective July 1, 2019, which was withdrawn. A few modifications have been made in the scheme which will take effect October 1, 2019, to comply with the latest regulatory guidelines.
The country’s largest lender said it will voluntarily extend benchmark-based lending to medium enterprises also to boost lending to the MSME sector as a whole.
The RBI has made it mandatory for all banks including small finance banks to link their new floating rate loans to buy homes, vehicles and for personal consumption along with loans micro, small and medium enterprises (MSME), to an external benchmark.