The home loan scheme by the largest lender, State Bank of India (SBI) is expected to meet the target set by the bank.
Under the latest home loan package, SBI has fixed the interest rate for loans up to Rs 20 lakh for a period of one year. The scheme is applicable from February to April and the bank is expecting to disburse loans to the tune of Rs 4,500 crore during this period. In February alone SBI sanctioned loans worth Rs 1,300 crore.
A senior SBI official said, "The response to the scheme has been excellent. We have seen volumes going up 50 per cent on a year-on-year basis. We sanctioned Rs 1,300 crore in February itself, which is a record for a month. For the next two months, the figure could be higher."
The bank official said that they will soon become the largest home loan lender in the market by overtaking Housing Development Finance Corporation (HDFC) and ICICI Bank. Presently is the No.1 player in the market and the SBI is striving to reach at that position. "We would like to be there as fast as possible," said the official.
Meanwhile industry experts feel that the bank should offer more such schemes to keep its impetus going for the coming times. Also the policy makers expect to follow a low interest regime in the near future.
After the SBI announce its home loan scheme, others in the industry have also started offering similar discount schemes. For instance, Central Bank of India is also offering loans up to Rs 20 lakh at an interest rate of 8% for one year and the bank is planning to sanction loans worth Rs 500 crore under the scheme.
Even Canara Bank is offering fixed rate for loans up to Rs 30 lakh for the first five years. The bank will charge 8.25% for the first year, 9.25% for the period between second and fifth year and prime lending rate minus 2.5% for the rest of the loan tenure. The scheme by Canara Bank is valid up to December 2009.
However people from the banking sector said that the 8% home loan scheme by SBI may draw the existing customers of other banks towards the lender but SBI clarified that the scheme has not been announced with the intention of hurting the customer base of other lenders. "We only wanted to offer a value proposition. Though there are instances of switching, we are not banking on it," the official said.
Further the official said that his bank is keeping the procedure transparent. "Customers are shown the EMI which they will pay for the first 12 months and thereafter," he said.