Tag: sbi

Banks face significant margin pressure despite surfeit of liquidity

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Banks are facing significant margin pressures despite surfeit of liquidity in the banking system, according to the State Bank of India’s economic research report Ecowrap.

A back of envelope estimate by SBI’s economic research department suggests that the core funding cost of the banking system that includes cost of deposits, negative carry on Statutory Liquidity Ration (SLR) and Cash Reserve Ratio (CRR) and Return on Assets is currently at 6 per cent, while the reverse repo rate is at 3.35 per cent.

Additionally, if the cost of provisions is added to the core funding cost, the total cost comes to around 12 per cent, the report said.

Also see: FinMin to soon issue circular on intermediary services under GST

“Clearly, banks are facing significant margin pressures. This apart, market sources point out that risk premia over and above core funding cost are not fairly acknowledging the inherent credit risk,” said Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.

The report said the conundrum of weak credit demand and excess liquidity is evident from the average reverse repo at ₹7 lakh crore since April and Government of India cash balances with RBI at ₹3.4 lakh crore.

Is credit risk adequately reflected in pricing?

The report cited the example of 15 years loans, which are being priced at even lower than 6 per cent, linking with repo / treasury bill rates. It emphasised that 10-year Government Security (G-Sec) is currently trading at 6.2 per cent and by the current pricing trends this could even gravitate towards 6 per cent again.

“This anomaly not only negates the concept of tenor premium but may create a material risk with regard to sustainability of such rates in long term, on which borrowers and banks are basing their financial calculations.

“The only good thing is that such pricing war is mostly restricted to AAA borrowers,” Ghosh said.

According to the report, three year term loans are being quoted at close to 4 per cent repo rate and seven year term loans for borrowers below AAA are also quoting a risk premium of 15-20 basis points over the 10 year rates. Working Capital Loans (WCL) are currently being quoted at a notch above reverse repo rate at 3.35 per cent.

Referring to RBI proposing the concept of normally permitted lending limit (NPLL) for specified borrowers, which is meant to nudge them to move towards corporate bonds market, Ghosh felt that this may lose its importance.

Also see: Hiring activity in August up 14% y-o-y: Report

In the current situation, corporate bond rate and bank lending rate are showing huge differential, he said.

CP market: significant churn

Ghosh observed that the commercial paper (CP) market is also witnessing significant churn with banks now almost absent.

“Non-Banking participants like mutual funds who do not have access to RBI Reverse Repo window are creating pricing pressure in CP market as they are sometimes quoting below RBI reverse repo rate.

“In fact, the CP market reflects the huge pricing gap between better and lower rated borrowers,” he said.

Asset Liability mismatch risk

The report underscored that the industry is replacing its long-term debts by very low-priced CP/working capital demand loan (ECDL) and this will obviously act as an enabler once the investment cycle revives. However there is the risk of an asset liability mismatch if the liquidity is withdrawn quickly.

Ghosh said, “As of now, the inflation numbers may not warrant such a decision from RBI, but if core inflation persists in the current range of 6 per cent or above, that might act as a hindrance to continued liquidity abundance.”

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realtors, BFSI News, ET BFSI

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New Delhi, India’s residential property market is expected to witness a strong consumer demand during the festival season with various banks, including SBI, providing concessional interest rates on home loans, according to real estate developers and consultants. They also hoped that other public and private banks would soon announce their festival offers on interest rates on home loans and processing fees.

On Thursday, the country’s largest lender State Bank of India announced various festive offers for prospective home loan customers, including a credit score-linked home loan starting at 6.70 per cent, irrespective of the loan amount. Earlier, a borrower availing a home loan above Rs 75 lakh had to pay an interest rate of 7.15 per cent.

Anarock group Chairman Anuj Puri said: “This is an extremely competitive move by SBI, and it virtually negates all the previous limitations which applied to special home loan interest rates. Instead of focussing on just budget housing, this new interest rate is genuinely democratic as buyers from any budget bandwidth will benefit.”

Puri termed the SBI’s decision as “aptly timed” ahead of the festive season.

“This year, we are likely to see significantly improved traction in the housing segment during this period. Waiving of processing fees and occupation-linked interest premium are added levels of savings,” he said.

Puri expected other lenders to follow SBI’s footsteps in order to remain competitive.

Vikas Wadhawan, Group CFO, Housing.com, Makaan.com and Proptiger.com, said the reduction in home loan interest rates by SBI will help the sector gain further momentum.

“Prices are already subdued and buyers will be able to save a little more money,” he added.

Amit Goyal, CEO, India Sotheby’s International Realty, said the rate cut by some of the country’s leading banks will act as a catalyst for faster decisions.

“SBI decision to offer lower interest rate irrespective of the prices of the unit or loan amount is likely to benefit buyers in the luxury segment as well. Given the upcoming festive season, which is considered auspicious by a large number of Indians to make big-ticket purchases, the timing of reduction in interest rate couldn’t have been better,” he added.

Raoul Kapoor, COO Andromeda, said the reduction in interest rates by major banks is expected to give a boost to the resurgent real estate market, especially during the busy festive season.

Signature Global founder and chairman Pradeep Aggarwal said: “The market is already on the up, and we expect that the recent decision by the SBI will help turn the table and lead to a substantial increase in sales.”

Nayan Raheja, Executive Director, Raheja Developers, said the demand for affordable and mid-segment houses will go up as affordability improves.

“This will be a double dose of benefit for buyers as developers have already kept the prices on a leash, even though construction cost is going up,” Raheja added.

Noida-based ABA Corp Director Amit Modi hoped that other private and public sector banks would also announce similar initiatives to revive the market confidence.

“The market has already started seeing sales increase post-May 2021, and the home loan interest rate reduction will further boost the buying sentiment. We are looking forward to a faster recovery and hope the measure will expedite the sector to reach pre-COVID levels sooner than expected,” he added.

Gurugram-based Silverglades group CEO Anubhav Jain said the SBI has set a trend for reducing home loan rates by reducing lending rate to as low as 6.7 per cent.

This would go a long way in giving a boost to the real estate sector in the upcoming festive season, he added.

“Home buyers will be entitled to get home loans at 6.7 per cent irrespective of the amount of loan. Earlier, people seeking home loans over Rs 75 lakhs were required to pay comparatively higher rates. Also the decision to do away with distinction between salaried and non-salaried is welcome and makes the whole process simpler and transparent,” Jain said.

With the introduction of the new offer by the SBI, a borrower can now avail home loan for any amount at a rate as low as 6.70 per cent,

This will result in a saving of 45 basis points (bps) which translates to an interest saving of more than Rs 8 lakh, for a Rs 75 lakh loan with a 30-year tenure, SBI said.

Further, the rate of interest applicable for a non-salaried home borrower was 15 bps higher than the interest rate applicable to a salaried borrower. The lender has removed this distinction between a salaried and a non-salaried borrower.

Now, there is no occupation-linked interest premium being charged to prospective home loan borrowers, the bank had said.

Recently, Anarock issued its estimates of housing sales for the current calendar year, projecting 30 per cent increase in demand across seven major cities to nearly 1.8 lakh units in 2021.

However, it said that the demand would still be lower than the pre-Covid levels.

In 2019, housing sales stood at 2,61,358 units across seven cities – Delhi-NCR, Mumbai Metropolitan Region (MMR), Pune, Bengaluru, Hyderabad, Chennai and Kolkata. PTI MJH MKJ



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Bad Bank to solve Rs 2 lakh crore bad loans, take NPAs off banks’ books; here’s how it will work

Banking & Finance

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Finance Minister Nirmala Sitharaman on Thursday announced that the Union government will guarantee Rs 30,600 worth of security receipts issued by the National Asset Reconstruction Company.

The Bad Bank is finally here, after a decade of discourse. It aims to help clean up banks’ books by taking over Rs 2 lakh crore bad loans. If it works as intended, Bad Bank may help cut system-wide bank NPAs (non-performing assets) by over 1%, and help recover some of bad debts too, analysts say. The National Asset Reconstruction Company (NARCL), as it is officially named, will acquire banks’ bad debt to resolve or liquidate. It will buy these stressed assets for a mix of cash, and government-guaranteed security receipts.

Finance Minister Nirmala Sitharaman on Thursday announced that the Union government will guarantee Rs 30,600 worth of security receipts issued by the National Asset Reconstruction Company (NARCL). “NARCL will acquire stressed assets through 15% cash payment to banks based on valuation and the rest 85% will be given as security receipts,” Nirmala Sitharaman said. The government-backed security receipts can only be invoked on resolution or liquidation.

What is NARCL? Why is it needed?

The National Asset Reconstruction Company (NARCL) was proposed by the Finance Minister in her Union Budget speech. NARCL, popularly known as Bad Bank, will function as an asset reconstruction company set up by banks to resolve stressed assets for smoother functioning. Public sector banks will have 51% ownership in NARCL. The bad bank intends to resolve stressed loan assets above Rs 500 crore each.

How the Bad Bank will work

Bad loan transfer: NARCL will take over bad loans worth Rs 2 lakh crore from banks, of which Rs 90,000 crore will be taken over in the first phase. The Ministry of Finance said that NARCL will acquire bad loans from banks for a mutually agreed-upon value (understandably, a net value after a haircut). NARCL will pay 15% of the agreed net value of the bad debt upfront in cash and the remaining 85% in form of security receipts. The banks would use this 15% cash upfront to reverse the debt write down. As for the security receipts for the remaining 85%, the bank would redeem those when the bad bank resolves or liquidates the bad debt; or, the bank may also trade these securities for cash.

Provision write-back: “These loans are fully provided in the books of the bank. The upfront cash received, 15% of the written-down value, would be reversed while the provisions for the balance (value of security receipts) are unlikely to be reversed even if it is fully provided,” analysts at Kotak Securities wrote in a note. “The larger release of provisions, if any, would be made as and when the cash is received on sale of these receipts or redemption of security receipts. The government guarantee on SRs can enable trading of these securities,” Kotak Securities added.

Government guarantee: The security receipts issued by NARCL are backed by the Union government guarantee. The government guarantee will cover any shortfall between the face value of the receipts and the actual realisation value of the bad loan.

Resolution is key

“How efficiently the professionals are resolving the stressed assets is to be monitored. One can argue that bad bank is likely to become a warehouse for stressed loans without expected recovery as it will be difficult to find buyers for legacy assets,” ICICI Securities said in a note. The Resolution of the proposed Rs 2 lakh crore of legacy stressed assets will lower GNPLs (gross non performing loans) by more than 2%, the note said. The estimated realisable value of 18% will lead to provisioning write-back of Rs 36,000 crore. “Through successful execution of phase-1, one can expect near term NPA reduction of >1% and NPA recoveries equivalent to 10bps of system credit,” ICICI Securities said.

Why is government guarantee needed?

The government said that resolution mechanisms of dealing with a backlog of NPAs typically require a backstop from the Government. “This imparts credibility and provides for contingency buffers. Hence, a Government Guarantee of up to Rs 30,600 crore will back Security Receipts (SRs) issued by NARCL. The guarantee will be valid for 5 years. The condition precedent for invocation of guarantee would be resolution or liquidation,” the finance ministry said.

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SBI to offer home loans at concessional rates during festive season, BFSI News, ET BFSI

Banking & Finance

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Bhopal, Sep 17 (PTI) With an eye on the coming festive season, leading public sector bank State Bank of India will provide home loans to its customers at concessional interest rates. SBI Chief General Manager (CGM) Umesh Kumar Pandey informed that this drive to provide home loans at concessional interest rates will be completed in two phases, an official release said on Thursday.

The first phase will be operated from September 1 to October 31, while the second phase will be operational from November 1 to December 31, it said.

Customers wishing to take a home loan during this period can get it with a minimum floor rate of interest of 6.70 per cent, and they will not have to pay any processing fee.

In this campaign, customers will also get many other benefits. The interest rates are linked with the CIBIL score.

No distinction has been made between the interest rates of salaried and non-salaried customers and a genuine effort has been made to pass on the benefit of lowest interest rates to all, it said.

Pandey also informed that the main objective of this campaign of SBI is to help more and more people to get their own home at low interest rates and without paying processing fee, making the home loan business simpler and more attractive, it added.



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SBI cuts home loan interest rate to 6.7%, waives processing fees, gives incentive for non-salaried borrowers, BFSI News, ET BFSI

Banking & Finance

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The State Bank of India (SBI) has announced that as part of its festive season offering it will be offering credit score linked home loans at 6.7%, irrespective of the loan amount. According to press release issued by SBI, earlier a borrower availing a loan greater than Rs 75 lakh, had to pay an interest rate of 7.15%; now with the introduction of the festive offers, a borrower can avail home loan for any amount at a rate as low as 6.7%.

“The offer results in a saving of 45 bps which translates to a huge interest saving of more than Rs. 8 lac, for a Rs. 75 lac loan with a 30 year tenure,” stated the press release.

Further, the rate of interest applicable for a non-salaried borrower was 15 bps higher than the interest rate applicable to a salaried borrower. SBI has said that it has removed this distinction between a salaried and a non-salaried borrower. “Now, there is no occupation-linked interest premium being charged to prospective home loan borrowers. This would lead to a further interest saving of 15 bps to non-salaried borrowers,” stated the bank.

The lender has also waived off the processing fees completely and will be offering attractive interest concession based on the credit score of the borrower.

“This time, we have made the offers more inclusive and the offers are available to all segments of borrowers irrespective of the loan amount and the profession of the borrower. The 6.70% home loan offer is also applicable to balance transfer cases. We believe zero processing fees and concessional interest rates in the festive season will make homeownership more affordable,” said C.S. Setty, Managing Director (Retail & Digital Banking), SBI.



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SBI’s Amit Saxena joins RBI Innovation Hub as CTO, BFSI News, ET BFSI

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Amit Saxena, Global Deputy CTO of State Bank of India joins RBI Innovation Hub as the CTO today.

On Aug 6, 2020, the Reserve Bank announced that it would set up Reserve Bank Innovation Hub (RBIH) to promote innovation across the financial sector by leveraging on technology and creating an environment that would facilitate and foster innovation.

The RBIH shall create an ecosystem that would focus on promoting access to financial services and products. This will also promote financial inclusion. The Hub will collaborate with financial sector institutions, the technology industry, and academic institutions and coordinate efforts for the exchange of ideas and development of prototypes related to financial innovations. It would develop internal infrastructure to promote fintech research and facilitate engagement with innovators and start-ups.

As the CTO of Reserve Bank Innovation Hub, Saxena will be tasked with building an innovation ecosystem for India’s banking and financial services industry. In his new position, Saxena will be based in Bangalore and will report to Rajesh Bansal CEO of RBI Innovation Hub.

Saxena has over 22 years of experience in IT Strategy formation, Application development, Stakeholder Management, and product development. At SBI played a leading role in driving digital initiatives and innovations in customer-centric journeys. Before joining SBI, Saxena worked for companies like Syntel, HCL technologies, TechMahindra, and Quark.



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Assets under management likely to grow 15% in 3-5 years, BFSI News, ET BFSI

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Even as lenders jostle for home loan pie, the assets under management of the segment across banks and non-banks are likely to grow by 15% over the next three to five years, according to ICICI Securities.

This would be on the back of the rise in disbursements and improved affordability.

“Factors such as low interest rates, stamp duty cut, benign real estate prices, etc. have improved affordability to own a house. ‘Work from home’ has kindled incremental housing demand. Construction too was not adversely impacted during the second wave,” the brokerage said.

Home loan growth fell to 8% over the previous three financial years as compared to 17-18% earlier while disbursements fell to Rs 5.3-5.5 lakh crore due to the pandemic. However, now risen to a run-rate of Rs 7-8 lakh crore.

Segment-wise

The Rs 2.5-7.5 lakh ticket size, or prime segment, has grown in the mid-teens, while the affordable housing segment has grown in mid-single digits over the past two to three years.

The extent of loans disbursed in the prime segment has also been significant, as per the brokerage.

Among housing financiers, the likes of Housing Development Finance Corp and LIC Housing Finance are returning to double digits for retail loans. In the case of banks, the home loan portfolio has stayed put since March. “Neither did they decline in the initial two months of this fiscal, nor was the momentum build-up witnessed in June-July. Year-on-year growth, thereby, sustained at around 9%. Now banks are fiercely competing with cut-throat pricing,” ICICI Securities said.

The Kotak offer

The competition among banks in home loan space is growing.

Kotak Mahindra Bank is offering home loans at a lower rate of 6.50 per cent is a festive period offer available only for two months till November 8, and the lowest offering is for those having highest credit scores coming from the salaried segment.

In the past, its rivals which include HDFC and SBI, have responded to rate cuts by slashing their own offering. The rate cut comes at a time when demand for home loans is falling in the country and may spark similar offers from rivals.

Large banks like the State Bank of India already offer home loans at as low as 6.65 per cent and 6.75 per cent, respectively, while the interest rates for HFCs is between 7.45 per cent and 10 per cent.

Nirmal Bang Institutional Equities said in a note, “The demand momentum seen in housing loans last year has tapered off and organic growth for the housing finance industry has been softening,” the brokerage house said. The organic growth in the home loan segment for large banks has been slowing over the last 45-50 days.



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Here are the interest rates of home loans linked to repo rate, BFSI News, ET BFSI

Banking & Finance

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Interest rates on home loans offered by banks are now linked to an external benchmark. This is because the Reserve Bank of India (RBI) has asked all scheduled commercial banks (except regional rural banks), local area banks and small finance banks to link interest rates on retail and MSME loans to an external benchmark rate with effect from October 1, 2019.

RBI, in its circular, has directed banks to link their retail lending interest rates to any of the following external benchmarks:

  • RBI’s repo rate
  • Government of India 3-months Treasury bill yield published by Financial Benchmarks India Pvt. Ltd. (FBIL)
  • Government of India 6-months Treasury bill yield published by FBIL
  • Any other benchmark market interest rate published by the FBIL

Most banks have chosen RBI’s repo rate as their choice of external benchmark. The lending interest rate linked to repo rate is known as Repo Rate Linked Lending Rate (RLLR). RLLR is made up of RBI’s repo rate plus spread or marginRLLR = Repo rate + Margin charged by the bank.

The Central Bank reviews the repo rate in every two months.

The margin charged by a bank will remain same for all home loan takers, however, as per the RBI circular, banks are allowed to charge a risk premium from borrowers. Risk premium charged by the bank will depend on how risky your bank perceives you to be and will therefore vary from one borrower to another.

Here are home loan interest rates offered by top banks for salaried individuals

BANK NAME RLLR Minimum Interest rate(%)** Maximum Interest rate (%)
IDFC First Bank 6.50 6.50 8.00
Kotak Mahindra Bank 6.65 6.65 7.10
Bank of Baroda 6.75 6.75 8.35
ICICI Bank 6.75 6.75 7.40
Punjab & Sind Bank 6.85 6.75 7.35
Union Bank of India 6.80 6.80 7.35
SBI Term Loan 6.65 6.80 7.15
Indian Bank 6.80 6.80 8.25
Central Bank of India 6.85 6.85 7.30
Bank of India 6.85 6.85 8.20
Axis Bank 6.90 6.90 8.40
Bank of Maharashtra 6.90 6.90 8.35
Canara Bank 6.90 6.90 8.90
IDBI Bank 6.90 6.95 8.55
Punjab National Bank 6.80 6.95 7.85
Indian Overseas Bank 6.85 7.05 7.30
UCO Bank 6.90 7.15 7.25
SBI Max Gain 6.65 7.15 7.50
Karur Vysya Bank 7.05 7.15 9.35
South Indian Bank 7.25 7.25 9.50
J & K Bank 7.20 7.30 7.60
Karnataka Bank 7.50 7.50 8.85
Federal Bank 7.65 7.65 7.75
Dhanlaxmi Bank 7.00 7.85 8.50
DCB Bank 8.16 8.16 8.16
Yes Bank 7.60 8.95 11.80

**Sorted on minimum interest rate charged by the bank after adding risk premium
*IDFC First Bank charges up to Rs 10,000 as processing fees (Additional premium is charged based on risk profile)
*Kotak Mahindra Bank charges a processing fee of max 2% + GST and any other statutory charges plus documentation charges up to Rs.10,000/-
*Bank of Baroda processing fees is 0.25% to 0.50% of loan; Min. Rs.8500/- Max. Rs.25000/-
*ICICI Bank charges processing fees in the range of 0.50% and 2% subject to a minimum of Rs 1,500
*Punjab & Sindh Bank offers a full waiver of processing and inspection charges
*Union Bank of India charges a processing fee of 0.50% of loan amount, Max. Rs 15000
*SBI charges 0.40 per cent plus GST as processing fees. Minimum Rs 10,000 and Maximum Rs 30,000 plus GST. (Exception builder-tie up projects)
*Indian Bank charges 0.230 per cent on loan amount as processing fees with a maximum amount of Rs 20,470.
*Central Bank of India charges 0.50% processing fee subject to Max Rs 20,000
*Bank of India charges 0.25% of loan; minimum Rs 1,500 and maximum Rs 20,000
*Axis Bank charges up to 1% of the loan amount subject to a minimum of Rs 10,000.
*Bank of Maharashtra charges a processing fee of 0.25% of Loan amount Max Rs.25,000/-
*Canara Bank charges 0.50%; minimum Rs 1,500 and maximum of Rs.10,000/-
*IDBI Bank charges a processing fee of Min Rs.2,500/- Max Rs.15,000/- (Plus GST)
*PNB charges 0.35 per cent as processing fees; minimum Rs 2,500 and maximum Rs 15,000 plus documentation charges 1,350/-
*Indian Overseas Bank charges 0.50% as processing fees; max Rs 25,000
*UCO Bank charges 0.5% of the loan amount, minimum Rs 1500 & maximum Rs 15,000.
*Karur Vysya Bank charges minimum Rs 2,500 and maximum Rs 7,500 plus GST as processing fees
*South Indian Bank charges 0.40 per cent of loan amount
*J&K Bank charges 0.25% plus GST Minimum Rs 5,000; maximum Rs 25,000 (NIL PC for takeover loans)
*Karnataka Bank charges 1 per cent with minimum Rs 500.
*Federal Bank charges 0.50% of the loan amount as processing fees; min Rs 10,000 and max Rs 45,000
*Dhanlaxmi Bank charges 1.25 per cent of loan amount
*DCB Bank charges up to 2% of the loan amount; minimum Rs 5,000
*Yes Bank charges 2% or Rs 10,000 whichever is higherHere are home loan interest rates offered by top banks for self-employed individuals

BANK NAME RLLR Minimum Interest rate(%)** Maximum Interest rate (%)
IDFC First Bank 6.50 6.50 8.00
Kotak Mahindra Bank 6.65 6.75 7.20
Bank of Baroda 6.75 6.75 8.35
Union Bank of India 6.80 6.85 7.40
Central Bank of India 6.85 6.85 7.30
Bank of India 6.85 6.85 8.35
ICICI Bank 6.75 6.90 7.55
SBI Term Loan 6.65 6.95 7.30
Indian Bank 6.80 6.95 8.40
Canara Bank 6.90 6.95 8.90
IDBI Bank 6.90 6.95 10.05
Punjab National Bank 6.80 6.95 7.85
Axis Bank 6.90 7.00 8.55
Indian Overseas Bank 6.85 7.05 7.30
Punjab & Sind Bank 6.85 7.10 7.90
Bank of Maharashtra 6.90 7.15 8.45
UCO Bank 6.90 7.15 7.25
Karur Vysya Bank 7.05 7.15 9.35
SBI Max Gain 6.65 7.30 7.80
J & K Bank 7.20 7.30 7.60
Karnataka Bank 7.50 7.50 8.85
South Indian Bank 7.25 7.60 10.00
Federal Bank 7.65 7.70 7.80
DCB Bank 8.16 8.16 8.16
Dhanlaxmi Bank 7.00 8.35 9.00
Yes Bank 7.60 8.95 11.80

**Sorted on minimum interest rate charged by the bank after adding risk premium
*IDFC First Bank charges up to Rs 10,000 as processing fees (Additional premium is charged based on risk profile)
*Kotak Mahindra Bank charges a processing fee of max 2% + GST and any other statutory charges plus documentation charges up to Rs.10,000/-
*Bank of Baroda processing fees is 0.25% to 0.50% of loan; Min. Rs.8500/- Max. Rs.25000/-
*ICICI Bank charges processing fees in the range of 0.50% and 2% subject to a minimum of Rs 1,500
*Punjab & Sindh Bank offers a full waiver of processing and inspection charges
*Union Bank of India charges a processing fee of 0.50% of loan amount, Max. Rs 15000
*SBI charges 0.40 per cent plus GST as processing fees. Minimum Rs 10,000 and Maximum Rs 30,000 plus GST. (Exception builder-tie up projects)
*Indian Bank charges 0.230 per cent on loan amount as processing fees with a maximum amount of Rs 20,470.
*Central Bank of India charges 0.50% processing fee subject to Max Rs 20,000
*Bank of India charges 0.25% of loan; minimum Rs 1,500 and maximum Rs 20,000
*Axis Bank charges up to 1% of the loan amount subject to a minimum of Rs 10,000.
*Bank of Maharashtra charges a processing fee of 0.25% of Loan amount Max Rs.25,000/-
*Canara Bank charges 0.50%; minimum Rs 1,500 and maximum of Rs.10,000/-
*IDBI Bank charges a processing fee of Min Rs.2,500/- Max Rs.15,000/- (Plus GST)
*PNB charges 0.35 per cent as processing fees; minimum Rs 2,500 and maximum Rs 15,000 plus documentation charges 1,350/-
*Indian Overseas Bank charges 0.50% as processing fees; max Rs 25,000
*UCO Bank charges 0.5% of the loan amount, minimum Rs 1500 & maximum Rs 15,000.
*Karur Vysya Bank charges minimum Rs 2,500 and maximum Rs 7,500 plus GST as processing fees
*South Indian Bank charges 0.40 per cent of loan amount
*J&K Bank charges 0.25% plus GST Minimum Rs 5,000; maximum Rs 25,000 (NIL PC for takeover loans)
*Karnataka Bank charges 1 per cent with minimum Rs 500.
*Federal Bank charges 0.50% of the loan amount as processing fees; min Rs 10,000 and max Rs 45,000
*Dhanlaxmi Bank charges 1.25 per cent of loan amount
*DCB Bank charges up to 2% of the loan amount; minimum Rs 5,000
*Yes Bank charges 2% or Rs 10,000 whichever is higher
All data sourced from Economic Times Intelligence Group (ETIG)
Data as on September 11, 2021

How will your EMI change in the new external benchmark linked lending rate regime?
To categorise the borrower on the basis of credit risk, some banks have internal risk assessment teams while others rely on credit scores to grade the risk of each borrower. As per RBI’s circular, if your credit score undergoes substantial changes, the bank can revise the risk premium charged on the home loan.

Also Read: 5 lesser known things about credit score that can impact your home loan interest rates

As leading interest rates are linked to an external benchmark, banks are required to reset the interest rates at least once in three months. Therefore, any change in the external benchmark rate, will mandatorily have to be passed on to the borrower within three months of the change.

Also Read: How your EMI will be reset under external benchmark lending regime

Why RBI asked banks to link lending interest rates to an external benchmark
Under the previous marginal cost of lending rate (MCLR) regime, home loan borrowers and others often complained that banks did not pass on the benefit of a lower rate whenever RBI cut the key policy rates but often raised the interest rates quickly whenever policy rates were hiked. Linking the interest rates to an external benchmark is supposed to bring in more transparency and faster transmission of changes in key policy rates.

For any queries or changes, please write to us on etigdb@timesgroup.com or call us at 022 – 66353963



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SBI and Bandhan Bank planning to move their back office verticals to fintech hub of Kolkata, BFSI News, ET BFSI

Banking & Finance

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Banks like State Bank of India and Bandhan Bank are planning to move several of their back office verticals and processing centers in the sprawling fintech hub of Kolkata which is being built on 70 acre in New Town area.

As many as 28 financial institutions and legal firms have already taken land in the fintech hub, for which foundation stone was laid in 2012, one year after Mamata Banerjee came to power ending three decades of Left rule.

The government on Friday made the land booking and registration process online. About 48 acre of 70 acre has been allotted so far.

The government has also made rules easier for mutual funds to acquire land here.

Entities other than mutual funds, become eligible for a plot of land in the fintech hub if and only if they have annual revenue in excess of Rs 500 crore every year for three years.

Bandhan Bank has taken two plots in the hub and is planning to build its headquarter here as well as create a currency chest and back office, managing director Chandra Shekhar Ghosh said at the event to launch the online facility.

SBI chief general manager Ranjan Kumar Mishra said the bank is contemplating various of its verticals and processing centers here.

The hub, which is located at one of the most modern townships adjacent to Kolkata, is expected to be ready in three to four years time.



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How to convert purchase via SBI Debit card into EMI, BFSI News, ET BFSI

Banking & Finance

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If you are a State Bank of India (SBI) debit card holder, then you have the option of making big-ticket purchases via EMI. As per the bank’s press release, “SBI offers EMI facility for its customers using SBI debit card in order to purchase consumer durables from merchant stores by swiping their cards at POS (Point of sale). They can also avail this facility while buying online via e-commerce portals such as Amazon & Flipkart through SBI debit card.”

Eligibility
Before availing the EMI facility, customers must confirm the amount they are eligible to claim. This can be checked by sending SMS from the mobile number that is registered with the bank.

The SMS must be sent in the following format: DCEMI to 567676 from the registered mobile no. with the bank.

Steps for availing EMI facility with SBI debit card
Here’s how SBI debit card holders can avail EMI via debit card.

If the debit card EMI is being availed at merchant store:
a. Swipe SBI Debit Card on POS Machine at merchant store
b. Select > Brand EMI > Bank EMI
c. Enter > Amount > Repayment tenor
d. Enter PIN and press OK after the POS machine has checked the eligibility
e. Loan amount is booked after successful transaction
f. Charge slip containing Terms & Conditions of Loan is printed and the customer has to sign on the same

If the EMI is being availed for purchases made on an e-commerce website:
a. Login on Amazon or Flipkart from the mobile no. registered with the bank
b. Select the required brand, article and proceed for payment
c. Select the Easy EMI option from different payment options that appear and then select SBI
d. The amount is auto fetched, enter the tenor and click on proceed
e. SBI Login page appears, enter the internet banking or Debit Card credentials
f. Loan is booked, terms & conditions (T&C) are displayed, if accepted, the order is booked

Loan amount and interest rate:
As per the bank, customers can avail of the loan ranging from Rs. 8,000 to Rs. 1 lakh at an effective interest rate of 2-year MCLR + 7.50% which is 14.70% currently. The loan is available with flexible tenure options of 6/9/12/18 months.

Other benefits:
As per the bank’s press release, there are several other benefits offered on making an EMI purchase via an SBI debit card. These are as follows:

  • Zero processing fee
  • Zero documentation & instant disbursal
  • No blocking of Savings account balance
  • A Standing Instruction equivalent to the monthly instalment amount will be set up on customers’ savings bank account automatically upon availing this facility.



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