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Separate PLR for home loans

Mumbai, Feb. 12: State Bank of India is considering a separate prime lending rate for home loans even as it expects a 12-13 per cent growth in total loan portfolio against a targeted 15-16 per cent rise this fiscal.

“We are looking at a proposal to introduce a separate State Bank home lending rate. However, the board has to approve it,” SBI managing director P N Venkatachalam said.

The proposed rate would be below the prime lending rate of the bank and help SBI to pass on the benefit of any interest rate reduction to existing housing loan customers, he added.

The housing loan portfolio has grown by Rs 3,000 crore up to December 2002 and would touch Rs 4,500 crore this fiscal, he added.

SBI chairman A. K. Purwar said the buoyant retail loan segment grew 33 per cent while total loan portfolio saw a rise of only 7 per cent.

Purwar also indicated that the largest commercial bank in the country has no plans to raise deposit rates “as of now”. He expected interest rates to be stable barring unforeseen circumstances.

Purwar also said that the government is examining a proposal to raise the 20 per cent ceiling on foreign fund holdings in State Bank of India. “I do not know when they will take a decision,” he added.

About the effect of a possible war in Iraq on inflation, Purwar said, “It will have an impact with the rise in oil prices but it cannot be estimated as to how much it will be.”

The interest rate scenario also looks steady. Globally the rates are much lower than in India and keeping this view in mind, the interest in the country would be softer in long run, he added.

Referring to SBI’s resurgent India bonds coming up for redemption in September 2003, he said the bank has sufficient funds to repay the bonds.

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