Freebie boost for new home loans
With finance minister P Chidambaram directing banks to spruce up home loan growth, most lenders are looking to offer a wide range of limited-period discounts and freebies along with home loans to boost the segment. Mahua Venkatesh reports.business Updated: Oct 11, 2012 21:40 IST
Home buyers may have reason to cheer this festive season. With finance minister P Chidambaram directing banks to spruce up home loan growth, most lenders are looking to offer a wide range of limited-period discounts and freebies along with home loans to boost the segment, which has seen tepid demand over the last year on account of high interest rates.
While most public sector banks including Punjab National Bank, Bank of Baroda and Vijaya Bank have reduced interest rates by about 25 to 50 basis points on home loans up to Rs 75 lakh, some have also decided to waive off processing charges.
Apart from this, Indian Overseas Bank (IOB) is offering free credit cards to new home loan customers. Indian Bank has reduced interest rates for customers who opt for more than one loan, while Vijaya Bank has extended the repayment period by seven years besides reducing interest rates and waiving off processing fees.
"We are trying make home loans more lucrative though the offer would be for a specified period of time," said Indira Padmini, general manager, retail banking and marketing, IOB.
Reserve Bank of India, meanwhile, may also review provisioning norms for loans towards real estate to boost growth in the sector.
"Appetite for home loans is increasing and special offers will boost demand further," said TM Bhasin, chairman and managing director, Indian Bank.
Chidambaram had in his last meeting with public sector bank chairmen in August instructed that they should chalk out ways to boost home loans while easing funds to the real estate majors to enable them to complete unfinished projects.
With high real estate prices and firm interest rates, inventories have been piling up in the real estate sector.
Developers have indicated that they would not be able to reduce prices due to high labour and input costs.
RBI had earlier cautioned banks saying that a higher-than-expected hike in interest rates could have an adverse impact on their asset quality.
"We have asked banks to ease lending to the sector as it is critical for the revival of the economy, they have started the process and in the next few months things are set to become better," said a senior finance ministry official who refused to be identified.
First Published: Oct 11, 2012 21:28 IST