Banks are luring customers with lower interest rates as part of a festive offer as the market has shifted to retail loans with demand for corporate credit staying sluggish. 

In a bid to boost retail credit growth, India’s largest lender State Bank of India (SBI) has brought down its home loan interest rates to a uniform 6.70% across slabs and risk profiles of borrowers. This means that higher loans for premium flats would also be available at the same interest rate. Even professions of borrowers would not matter in determining the interest rate for home loans.

Earlier, a borrower availing a loan greater than Rs 75 lakh had to pay an interest rate of 7.15%. With the introduction of the festive offer, a borrower can now avail home loan for any amount at a rate as low as 6.70%, implying a saving of 45 basis points (bps). “This translates to a huge interest saving of more than Rs 8 lakh for a Rs 75 lakh loan with a 30-year tenure,” SBI said.

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 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.

“Generally, the concessional interest rates are applicable for a loans up to a certain limit and are also linked to the profession of the borrower. This time, we have made the offers more inclusive and they are available to all segments of borrowers, irrespective of the loan amount and the profession of the borrower,” said SBI managing director of retail and digital banking CS Setty.

Setty believes such lower home loan rates will boost demand and play a role in reviving the economy. “We believe zero processing fees and concessional interest rates in the festive season will make homeownership more affordable. Our country has shown tremendous resilience during the pandemic. Being the banker to every Indian, we, are committed to doing our bit in reviving the economy by enabling housing for all,” he said.

State-owned lender Punjab National Bank (PNB) has also joined the festive season bandwagon, announcing its offers even before SBI. The bank is waiving all service charges, processing and documentation fees on its retail products. These include home, vehicle, personal, pension and gold loans.

PNB now offers an interest rate starting from 6.80% on home loans and 7.15% on its car loans. The bank is also offering personal loans to the public from 8.95%, which is one of the lowest in the industry. The festive offers of the bank are available till December 31, 2021, through any of the PNB's branches around the country or via digital channels.

“PNB is committed to its customers by offering them customised products, incentives and ease of banking services. The bank is confident that this festive season will see an encouraging revival in overall consumer spending, thereby boosting its credit portfolio,” it said. 

Bank of Maharashtra has also waived off processing fees on its car, home and auto loans. The bank’s home loan starts at 6.90% and car loans at 7.30%. The retail products are backed by several special features like two free EMIs on regular repayment in housing loan; loan facility up to 90% in car and housing loans; and no prepayment, pre-closure, part payment charges. 

Bank of Maharashtra has also revamped its gold loan scheme, The state-run bank offers loans up to Rs 20 lakh at a rate of interest of 7.10%, with zero processing fee up to Rs 100,000. The ‘Gold Loan Point’ is a dedicated counter in the bank’s select branches to facilitate gold loans within 15 minutes. 

In its festive offer, Bank of Baroda has reduced the interest rates on both its home loans and car loans by 0.25%. The interest rates on home loans now start at 6.75% and car loans at 7%. 

"With the introduction of these retail loan offers for this festive season, we intend to bring new to bank customers an attractive proposition for availing home loans and car loans who will be benefited from lower rates and waiver of processing fee on offer,”  said HT Solanki, GM - Mortgages and other retail assets, Bank of Baroda.  

Kotak Mahindra Bank (KMBL) has also reduced its home loan interest rates by 15 bps to 6.50% per annum. This rate is available across all loan amounts but is linked to a borrower’s credit profile. The limited period festive season offer has started from 10 September and will end on 8 November. “With this, KMBL continues to offer one of the most competitive rates in the home loan industry,” the private sector lender said.