Mumbai, Feb. 21: State Bank of India (SBI) has announced a major relief to its existing housing loan customers who have availed of loans at a floating rate of interest. The bank has decided to pass on the new low interest rates of 9 per cent and 9.5 per cent to all its existing housing loan customers.
SBI explained that its floating rates of interest are linked to the State Bank Medium Term Lending Rates (SMBTLR). Hence, the recent reductions in rates of interest, which were not effected by movement of SBMTLR, could not be passed on to the existing customers.
“Though technically correct, this resulted in an anomaly whereby new customers were paying a lower rate of interest on their housing loans as compared with older customers,” it added.
SBI has now decided to pass on the new rates of interest to all its existing housing loan customers who are maintaining their accounts satisfactorily. While this benefit will be available to them with effect from Apri1 2003, the interest rates will be 9 per cent (2.25 per cent below SBMTLR) for housing loans with original maturity up to 10 years and 9.5 per cent (1.75 per cent below SBMTLR) for loans beyond 10 years.