SBI goes for the kill, cuts home loan rate to 8%

Happy days are here again for home buyers as the bank freezes the rate for a yearIn a move that may trigger a rate war, State Bank of India (SBI) today said it would charge 8 per cent interest on new loans for home buyers and small and medium enterprises for a year. The loans disbursed till the end of April will be eligible for this rate. Through the scheme, SBI will offer a discount of up to 425 basis points over the prevailing rates under various packages for a year.As part of the package from public sector banks, announced last month, SBI was offering new home loans up to Rs 5 lakh at 8.5 per cent, while it was charging 9.25 per cent for those between Rs 5 lakh and Rs 20 lakh. Outside the package, for loans above Rs 20 lakh, the minimum interest rate charged was 9.75 per cent under the floating rate scheme, while under the fixed rate scheme the rate on offer was between 11.25 and 12.25 per cent.In the case of existing borrowers, while rates have not been lowered, SBI has launched a new scheme under which it will sanction up to Rs 5 lakh at 8 per cent.SBI also announced a package for small and medium enterprises, under which additional working capital facility of 20 per cent of the fund-based limits will be given to take care of raw material inventories, finished goods and delayed payments from buyers.SMEs will also be offered a term loan product to purchase fixed assets, including generator sets at the concessional rate of 8 per cent in the first year.