SBI to wind up 8% home loan scheme?

The buzz in the country on Tuesday morning was that State Bank of India, the largest home loan provider in the country, may close its My Home Campaign on November 8, 2009.

But a senior official of the bank told DNA Money it was not yet decided if the scheme will be discontinued.

“We had announced the first scheme in February for three months, which was extended upto early August. An improved version was announced on August 8, which is supposed to be on for three months. This three-month period ends November 8, which is this Saturday,” says the SBI official.

“But the decision on whether to extend the scheme or discontinue has not yet been taken,” he added.

Early Tuesday, media reports quoted Jayanta Sinha, chief general manager of Bengal circle as saying his bank will withdraw the scheme with effect from Saturday.

“To avail of the 8% interest rate, applications have to reach SBI by November 7 and applicants have to take either whole or part of the loan amount by November 21,” Sinha was quoted as saying.

Under the My Home campaign started on August 8, 2009, State Bank of India had dropped the interest for home loan up to Rs 50 lakhs to 8% fixed for the first year and 8.5% fixed for the next two years.

Similarly, a person taking a loan higher than Rs 50 lakh will have an interest rate of 8% fixed for the first year and 9% fixed for the second and third year, while the interest rate for those opting for Rs 5 lakh loans is fixed at 8% for the first five years.

After the third year the floating interest would be 1.75-2.75% below the rate that SBI lends to its best customer at called the State Bank advance rate (SBAR), alternatively the borrower can take a fixed rate that is 0.75-1.25% below the SBAR depending on the loan amount.

Following the launch, SBI sanctioned Rs 2,100 crore of home loans between May and July 2009, including new home loans and balance transfers, the official told DNA Money.

“Our target is to double the amount we sanctioned last year,” another SBI official had told DNA Money at the start of the launch campaign.