The State Bank of India today took the battle to its rivals
by slashing the processing fees for home and car loans by 50 per cent. The
country’s largest commercial bank recently sparked a rate war by offering one
of the lowest interest rates on home loans in a bid to corner business in the
festive season when borrowers traditionally scout for deals.
The reduction in the processing fees is seen as an attempt
not only to attract new customers with the festival season around the corner
but also poach on the base of its rivals. The country’s regulators — the
Reserve Bank of India and the National Housing Bank — have done away with the
levy of pre-payment penalty, thereby providing home loan borrowers a good
opportunity to shift to lenders such as the SBI who charge a lower interest
rate.
In August, the country’s largest bank brought down interest
rates on housing loans up to Rs 30 lakh to 10.25 per cent from 10.50 per cent.
Similarly, interest rates on home loans above Rs 30 lakh and up to Rs 75 lakh
were revised to 10.40 per cent against 10.75 per cent earlier.
Subsequently it
reduced the benchmark base rate by 25 basis points, thus making home and auto
loans even cheaper. The housing loans provided by the SBI are at least 25 basis
point lower than those offered by its larger peers.
In a statement issued today, the bank said the new processing
charges would be applicable to loans availed from October 17 to December 31.
“With this reduction, the bank is quoting the lowest processing fee on both
home and auto loans to our customers,” it said.
For home loans up to Rs 25 lakh, the processing charge has
become 0.125 per cent of the loan amount from 0.25 per cent earlier. Similarly,
in case of loans between Rs 25 lakh and Rs 75 lakh, the processing fee would
now stand at Rs 3,250 against Rs 6,500, while for loans above Rs 75 lakh, it
would be a flat Rs 5,000 compared with Rs 10,000 per application earlier.
With regard to auto loans, the processing charge has been
slashed to 0.255 per cent of the loan amount against 0.51 per cent. It will
come down to Rs 510 on the lower side.
