State Bank of India has reduced its home loan growth target for the financial year. The lender also cut interest rates on deposits of five years and more.
The country largest lender’s announcements come a day after it sharply cut interest rates on home loans.
“Our growth target at the beginning of this year for home loans was 25 per cent but now we would be looking to achieve 15-20 per cent growth in our home loan portfolio,” said Atanu Sen, deputy managing director of SBI.
The revision is due to the economic slowdown, senior officials of the bank said on Thursday. SBI has a home loan portfolio of Rs 1.05 lakh crore, with a market share of 17 per cent in the individual home loan segment.
SBI had yesterday cut its interest rates by 50 basis points (bps) to 10.25 per cent for home loans up to Rs 30 lakh. For loans above Rs 30 lakh, SBI had changed its interest rate to 10.40 per cent. Earlier, the bank was charging 11 per cent for loans between Rs 30 lakh and Rs 75 lakh, and 11.25 per cent for the loans above Rs 75 lakh. The bank also cut interest rates on automobile loans by 50 bps to 10.75 per cent. The new rates would be effective from August 7.
“The new loans would be applicable only for the new borrowers. However, existing borrowers can pay one per cent of their outstanding amount and switch to the new interest rates,” Sen added.
The bank has no plans to revise its base rate for now. “To reduce the base rate, our interest cost has to come down, which is not possible as inflation is high and we have to offer customers a real rate (positive) of interest,” said P Pradeep Kumar, deputy managing director and group executive.
SBI also announced a cut in interest rates on deposits with a tenor of five years and more. It will now pay 8.5 per cent to depositors who will park their money with the bank for more than five years. It was paying 8.75 per cent on deposits below Rs 15 lakh, and nine per cent on deposits of Rs 15 lakh to Rs 1 crore. “This has been done as a part of asset-liability management,” Kumar added.
SBI might also cut its educational loan rates once the credit guarantee trust for the segment, announced in the Budget on the lines of a similar facility for small and medium enterprises’ loans, becomes operational, Sen said.
Meanwhile, Punjab National Bank on Thursday increased interest rates on deposits by 0.25 per cent, to nine per cent for a maturity of one year, with effect from on Thursday.
“The bank has decided to increase the rate of interest on single domestic deposits of less than Rs 1 crore from 8.75 per cent to nine per cent for maturity of one year,” PNB said in a filing to the Bombay Stock Exchange.