moneycontrol.com
The State Bank of India (SBI) started reaping benefits of retail rate cuts and other freebies. Since it cut interest rates last August, the banking behemoth has registered a big jump in the total worth of daily home loan applications or 'sourcing' as it is called in banking parlance. At the same time, it is contemplating to ease the process of loan switch over from other banks in view of practical problems customers face.
"SBI is getting overwhelming response in the home loan space. It is offering the lowest rate. Although it is a bit lingering process to get a home loan (sanction) compared to private sector lenders, borrowers mostly prefer SBI products due to lower interest rates. Even a marginal rate differential matters big when the ticket size is above Rs 50-75 lakh," a Mumbai based home loan advisor told moneycontrol.com on condition of anonymity.
Sources say the value of home loan applications has nearly trebled since August when the bank cut rates. Majority of the applicants (more than 90%) are getting final sanctions. So far, it has disbursed around Rs 7,000 crore home loans in the last two quarters (April-September).
Earlier, SBI had cut auto and home loans by 50 basis points while it later slashed its base rate by 25 bps to 9.75% in September. SBI is now offering 10% on home loans upto Rs 30 lakh while the rate of interest is 10.15% for a ticket size above Rs 30 lakh. It has also reduced its processing fees. At the end of July-September quarter, SBI's home loan portfolio stood at around Rs 1.12 lakh crore.
When contacted a senior SBI official confirmed the development but refused to give detail on daily home loan applications.
"Response is encouraging no doubt. However, competition too is increased. We are gearing up our efforts to expand home loans. Increasingly home loan borrowers are willing switch over their existing loans to our bank."
Meanwhile, the lender is mulling over some measures that would facilitate customers to switch over their loans like waiving of third party guarantee clause or decreasing conversion fees and so on.
"In case of switch over, an interim security in the form of third party guarantee is required unless we get the possession of title deeds of the property from the other bank. Most of the banks wherein borrowers want to shift to our bank, are dillydallying the process of handing over title deeds. Naturally, they do not want to lose their customers," the official said.
In order to ensure the possession of title deed, the acquirer bank normally asks for third party guarantee from the customer. However, it is a cumbersome for borrower to ask any third party to act as a guarantor. This prompts SBI to deliberate over it.
saikat.das@network18online.com
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