SBI’s teaser home loan scheme till Dec 31: Bhatt

The country’s largest public sector lender State Bank of India (SBI) today said that the bank would continue its teaser home loan scheme till December 31 this year.“Now,we have already decided to continue our teaser home loan scheme till the end of October-December quarter this financial year. As far as the last quarter is concerned,we will take a call,if required,at that point of time,” State Bank of India Chairman OP Bhatt said at the sideline of an international banking seminar held here on Thursday.Under this special product,SBI currently offers home loans at an interest rate of 8 per cent for the first year and 9 per cent for the second and the third years. The rates in subsequent years are linked to the bank’s floating rates. When the bank launched the scheme in 2008,the government was pushing banks to increase lending and SBI had surplus liquidity. The current offer is due to expire in December. The bank will then decide whether to extend the loan scheme further.“This is one of the best products for both customers and the bank as well. We had launched the product at a time when we were compelled to park our fund with Reserve Bank of India (RBI) at 3.25 per cent rate of interest. So,the teaser home loan that was started with 8 per cent rate of interest was a viable business for us,” Bhatt said,adding that the decision for the fourth quarter is too early to comment.

However,some banking sources said that other public sector lenders might close it before the deadline (December 31). “After looking into all pros and cons on this issue,we are planning to end it before the deadline. It is only because of the Reserve Bank of India’s risk weightage which has been increased to 2 per cent at present from the earlier existing 0.4 per cent,” said a top banker.

On rights issue,Bhatt said,“The government has agreed to our proposal for the rights issue in principle. The government is likely to pay Rs 12,000 crore for the issue,which was likely to hit the market by the fiscal-end. Ministry of finance is currently studying our proposal for the rights issue and we are waiting for the government’s approval which is expected to come by the month-end. The issue size will be some where between Rs 18,000 and Rs 21,000 crore.”