Public sector banks on Monday announced a maximum interest of 8.5% for home loans up to Rs 5.00 lakh, while those between Rs 5-20 lakh would be offered at 9.25%. They have also said that the banks will not charge processing fees and pre-payment charges for loans up to Rs 20 lakh, and would also provide free insurance cover.
State Bank of India (SBI) chairman O P Bhatt felt that the interest rate under the two schemes could come down, but would not go up beyond the threshold limit of 8.5% and 9.25% for a five year period.
The offer under the package would be till June 30,2009, and after the lock-in period of five years, the borrowers could look in for free or floating rates that could change in accordance with market conditions, Bhatt said.
The public sector banks would also give these loans at a margin of 10% up to Rs 5 lakh and 15% for loans between Rs 5 lakh and Rs 20 lakh, and in either case, banks would offer free insurance cover. The banks have also decided to cut the lending rates for the micro and medium enterprises by 100 basis points.
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