The special home loan scheme by SBI has been a cause of disappointment for many of its private competitors that report a migration of its customers to SBI.
The industry sources inform that following the launch of SBI scheme, private sector banks have witnessed a considerable rise in their loan swapping.
However SBI clarifies that the bank's vision by announcing this scheme was to mop up demand and not draw the customer base of other banks. "We actually expected to drive good demand for new home loans from prospective buyers but are pleasantly surprised with increasing response on the loan swapping front," said an SBI official.
The SBI scheme has affected some major private sector banks including ICICI Bank that has recorded ‘noticeable' foreclosures in home loans. "There is also significant increase in the number of enquiries on foreclosure penalty and request for list of documents necessary for applying for a loan with another bank for swapping," said a source in ICICI Bank.
However, the official spokesperson of ICICI Bank in Mumbai said, "There has not been any increase in number of foreclosures of home loans."
Although SBI scheme has been able to pick up demand in the market but the new loan applications still remain "dull" in some major urban locations. This is due to expectation of further fall in the interest rates and real estate prices.
Such schemes have also been introduced by other banks such as Canara Bank and Central Bank of India but all these have been valid only for the new customers. The existing customers also view for some benefits.
A senior IT professional who had taken Rs 20 lakh housing loan from ICICI Bank said, "When I asked whether any renegotiation of interest rate on my home loan is possible, I was told by the bank staff that I can close the loan to go to another bank."
At the same time an official from HDFC Bank said that the existing customers are enquiring about the penalty and foreclosure of loans to switch over to new loans.
Normally the pre-payment penalty on loans after serving the EMIs for three years range around 2.25-3% of the outstanding.
The customer who swaps his loan for the SBI scheme will benefit depending on the various factors.
Deputy General Manager, State Bank of Hyderabad that is also offering home loans at 8%, Mr Dattatreya Sarma said, "This is a calculation which needs to be worked out at the individual level depending on the loan amount outstanding, rate of interest and its nature (flat/floating) and the foreclosure penalty one has to pay."