SBI Allows its Existing Home Loan Buyers to Switch to Floating Rates

The State Bank of India (SBI) decided to let its existing home loan buyers to switch over to the new floating rates that are much lower than the prime lending rates. An official from SBI said that the switchover will charge a small fee of 1% on the outstanding loan amount.

The move is to help all those existing borrowers whose home loans are linked to the prime lending rate which is as high as 14.75% at present. The current floating rate of the bank varies from 10.5% for up to Rs.30 lakh loan, 10.75% for between Rs.30 lakh and Rs.75 lakh, and 11% for loans above Rs.75 lakh. The bank was decided to take this measure with the result of customers making enquiries about shifting their loans to other banks.

Also on 27th March, SBI has raised interest rates on Fixed Deposits on select maturities by up to 1%. An official from bank stated that, fixed deposits with maturity period of 7-90 days will earn an interest of 8% against the existing 7%. Also, the interest rates on other term maturity periods of below one year have been raised. It has left unchanged the interest rates on fixed deposits beyond one-year maturities.

Earlier this month, the other banks like Bank of Baroda and Bank of India had also raised Fixed Deposit interest rates. According to analysts, the increase in interest rates of fixed deposits of short-term maturities is due to the tight liquidity situation in the system.

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