SBI may have cut its base lending rate by 40 basis points to 9.3 per cent following RBI's latest policy rate cut, but home loan customers of the top lender will have to pay up to 0.7 per cent above the base rate, and interest of as much as 10 per cent for their loans.
Accordingly, the actual reduction in home loan rate will be a maximum of only 20 basis points, while a higher margin above the base rate will mean that customers will have to pay the same rate of interest for home loans above Rs 1 crore.
The rate for Maxgain home loans above Rs 1 crore - at 9.75 per cent for women - would come down by only 20 basis points, while for other customers it would actually remain unchanged at 10 per cent with effect from tomorrow despite a reduction of 40 basis points in base rate.
For the CRE (Commercial Real Estate) Maxgain loans, SBI would charge as much as 65 basis points above base rate or 9.95 per cent for the women customers and 70 basis points above the base rate or 10 per cent for other customers.
The bank spokesperson was not immediately available for comments. However, bank officials tried to justify the increase in the markup over base rate, saying the decline in actual home loan rates has been 75 basis points since December 2013, as against a reduction in base rate by 70 basis points.
They also said that the base rate for other lenders continues to be higher at 9.55 per cent, while in December 2013 also it was higher at 10.3 per cent as against SBI's 10 per cent.
Interestingly, state-owned SBI was among the first to announce a reduction in its rates after RBI surprised with a 50 basis points reduction in its policy rate on September 29 as it lowered its minimum lending rate or base rate by 40 basis points -- the highest for any lender so far -- from 9.7 per cent to 9.3 per cent with effect from October 5, that is tomorrow.
"RBI has cut interest rate by 0.50 per cent, we have reduced it by 0.40 per cent," SBI Chairperson Arundhati Bhattacharya had said on Tuesday about cut in SBI's base rate soon after RBI Governor Raghuram Rajan announced a 50 basis point cut in the central bank's policy rate to 6.75 per cent -- the lowest level in his tenure.
However, in its latest circular, dated October 3, to all local head offices SBI has explained the actual home loan interest rates that would be applicable across various categories following the latest reduction in the base rate coming into effect from tomorrow.
As per the circular, women customers, who typically get a subsidised rate would be charged 20 basis points above the base rate, resulting in an actual interest rate of 9.5 per cent tomorrow onwards -- down by only 20 basis points from the existing rate of 9.7 per cent.
Till today, women home loan customers were being given housing loans at the base rate of 9.7 per cent without any markup, but tomorrow onwards they will be charged 20 basis points above the base rate of 9.3 per cent or an interest rate of 9.5 per cent. .