SBI freezes home loan rates at 8%

Mumbai, Jan 31: Country's largest lender State Bank of India on Saturday announced freezing interest rates on new home loans at eight per cent for a period of one year. For its existing customers, SBI has introduced a scheme--SBI Lifestyle loan--under which customers can avail eight percent interest rate for a period of one year.

However, this facility would be available to the extent of 10 per cent of their home loans but up to a maximum of Rs 5 lakh, an SBI release said. The new scheme of eight per cent interest rate will be offered for loans taken during February 2 and April 30, 2009, the bank said. The bank would reset the interest rate after the freeze period to the same rate as originally applicable under the respective schemes, a press release issued here said. SBI's existing borrowers under the two home loan schemes- loans upto Rs 5 lakh and Rs 5-20-lakh bracket--would also be given loans at eight per cent for a period of one year, the bank said. Here as well, after one year of freeze period the originally contracted rate will be applicable, it said.

The bank has also introduced a new package for SME borrowers--SME Care--under which an additional working capital facility of 20 percent of the fund based limits to customers, the release said. "The loan will be given to take care of inventories of raw materials, finished goods as also delayed payments from their buyers in the current downturn at an interest rate of 8 percent," SBI said. The loan will be repayable in one year, it said. Besides, country's largest lender has also introduced SME Help--under which term loans will be offered to purchase fixed assets including generator sets with concessionary interest rate of eight percent for the first year, the bank said. After the first year, the applicable rate will be charged for the loans, it said.