8% interest on SBI home loan for 1st year

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Mumbai: An interest rate, which may set a benchmark for short-term loans for the housing and SME sectors, India’s largest bank State Bank of India (SBI) on Saturday decided to freeze interest rates on new home loans for a period of one year at 8%. The new scheme of 8% interest rate will be offered for loans taken during February 2 and April 30, 2009 and there will not be any cap on loan amount. According to a SBI release, the interest will be reset after the freeze period to the same rate as originally applicable.

The bank, ahead of a meeting between Pranab Mukheerji, who is in charge of the finance ministry, and public sector bank (PSB) chiefs on Monday, announced that along with home loan, SMEs will also be offered a term-loan product at 8%.

Existing SBI home loan customers also have been given some discounted offers. For them, the bank has launched a new product SBI Lifestyle Loan – a multipurpose loan to the extent of 10% of their home loan up to a maximum of Rs 5 lakh at an interest rate of 8% for a period of one year.

The borrowers with loans up to Rs 5 lakh and who are in the Rs 5 lakh to 20 lakh bracket would also be given loans at 8% for a period of one year, the bank said. The originally contracted rate will be applicable after the one-year period.

Earlier PSBs collectively as a part of stimulus package had launched a scheme to lend housing loans up to Rs 5 lakh at 8.75% and up to Rs 20 lakhs at 9.25%. These rates are frozen for five years.