After linking its short-term loans and large saving deposit rates to the Reserve Bank of India's repo rate earlier this year, the State Bank of India (SBI) had announced in June that it would introduce repo-linked home loans July onwards. After which, the apex bank slashed down the repo rate by 1.1 per cent in this calendar year alone.
However, despite this, the bank's existing customers did not gain anything from this development but this may change in the near future. SBI Chairman Rajnish recently stated that the bank is looking for a possibility of extending the benefit of the repo-linked rate (RLLR) to the current home loan borrowers so that these consumers can avail cheaper loans.
The step by SBI comes amidst a liquidity surplus in the banking system for 10 straight weeks June onwards along with the expectations of better traction in consumer demand in the second half of the fiscal.
The State Bank is reportedly expecting around 12 per cent growth in loans during this fiscal year over an outstanding of ₹23 lakh crore while trying to contain fresh slippages from the farm, MSME and retail sectors.
In the meantime, if SBI does end up extending repo-linked home loans to its existing customers, they can still expect the interest rate to go down by up to 85 bps. The bank's RLLR has a 2.25 per cent mark-up over the repo rate of 5.40 per cent currently.
On the other hand, along with SBI, public sector banks like Allahabad Bank, Syndicate Bank, Bank of India and Union Bank also offer repo rate linked home loans to new customers at present.
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