Published & Updated as on - 2010-03-19
State
Bank of India, the country’s largest lender, has decided to extend the special
offer for auto and home loans till September. Under the scheme, which was
earlier valid till the end of April, the bank had frozen the interest rate on
new home loans at 8 per cent during the first year, while the cost of auto
loans was fixed at 10 per cent during the first year. Subsequently, the
interest rate was to be revised to the prevailing rate. Extending the scheme by
five months, the bank also said today that top-up loans for home loan customers
that are disbursed up to September 2009, would cost 8 per cent in the first
year. SBI reiterated that the special rates were aimed at stimulating demand.
When it had first announced the special rate schemes, its rivals – including
HDFC, the largest mortgage player – had termed the move as a teaser offer and
had said that it would only result in borrowers shifting their accounts.
Subsequently,
HDFC executives said that the move has not resulted in too many customers
shifting to SBI to avail of the special offer. But the housing finance company
responded by reducing its prime lending rate to enable its existing borrowers
to avail of the lower interest rate regime. While SBI has lowered its benchmark
prime lending rate by 150 basis points since November, it has not participated
in the latest round of rate cuts by public sector banks. Instead, it has come
up with special loan schemes aimed at housing, auto and small and medium
enterprises.
When contacted, Nanda Kumaran, SBI’s chief general
manager for retail banking said the bank has sanctioned loans worth Rs 2,500
crore to over 20,000 customers under the special home loan scheme which was
announced in February 2009. Similarly, in case of the special auto loan scheme,
he said, the response was good. Most auto loans disbursed through the scheme
have been availed of by individuals purchasing entry-level models from Maruti,
Hyundai and Tata Motors. These loans do not include the bookings for Nano,
which opened last week. “We have received a good response to the schemes and
the extension by five months is expected to help boost the demand in the
economy,” Nanda Kumaran added. Executives at private sector banks said that SBI
was among the most aggressive players in the car finance business at present
and was among the highest loan disbursing lenders along with HDFC Bank. Many of
the bigger players, such as ICICI Bank, Citi and Standard Chartered, have
reduced the scale of operations in the auto loan market due to rising
delinquency levels.
An SBI executive said that the country’s
largest bank had managed to increase the outstanding retail credit portfolio to
above Rs 1,00,000 crore at the end of March 2009, partly aided by the special
offers and aggressive pricing of retail loans. It is targeting a 30 per cent
growth in its retail portfolio during the current financial year. As of
December 2008, SBI’s auto loans portfolio was estimated at Rs 8,970 crore,
32.14 per cent higher than the Rs 6,788 crore it had disbursed till December
2007. Similarly, during the period, its home loan portfolio grew 21.56 per cent
to Rs 52,062 crore, while the residual retail loan book was estimated to have
increased by 30.82 per cent to Rs 37,077 crore. |