SBI lending rate has now reduced to 9.10% from 9.25% while the new rate of HDFC is 9% after reduction of 25 basis points. The decision came soon after the SBI merged five of its associates and Bharatiya Mahila Bank that resulted in placing it on the list of top 50 large banks of the world. The bank has also reduced its base rate by 0.05 per cent to 9.25 per cent. Similarly, the benchmark prime lending rate or BPLR has also been reduced by similar percentage points to 13.85 per cent from 14 per cent.
The Reserve Bank of India (RBI) announced marginal cost of funds-based lending rate (MCLR) in April last year whereby borrowers were given loan based on this benchmark. In the new benchmark lending rate, funds are calculated through a weighted average. Under base rate, fund costs are calculated through average cost.
Loans issued before April last year are tied up to base rate cost of accounting. Reduction in base rate will benefit the borrower as he has to shell out less against his loan.
Post demonetization, the banks were gushed with huge inflow of deposits and proved to be a boon for the economy of the country. This led to a significant reduction in the lending rates offered by banks.
The bank has also reduced its base rate by 0.05 per cent to 9.25 per cent. Similarly, the benchmark prime lending rate or BPLR has also been reduced by similar percentage points to 13.85 per cent from 14 per cent.
These changes regarding the HDFC & SBI lending rate reduction would further enhance the Real Estate scenario by reducing the cost of Home Loans.
Increased charges also levied on customers
Meanwhile, the SBI has also started charging more from its account holders, including those of the six lenders merged with it, for not maintaining minimum balance as well as for services like cheque books and lockers. The SBI’s decision to raise charges on various services is likely to be followed by other banks.
The bank has increased locker rent and curtailed number of free locker usage in a year. After usage 12 times, the customer has to pay Rs 100 plus service tax applicable for visiting his or her locker. Also for any current account holder, the first 50 cheques are free in a financial year; thereafter, it will cost Rs 3 per leaf.So 25-leaf Cheque Book now costs Rs 75 plus service tax and 50-leaf Cheque Book cost is Rs 150 excluding service tax.
SBI will also charge Rs. 20 for opening fee including enrollment for savings account among other various charges that the bank has raised.
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