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SBI considering hike in Home Loans by 25 to 50 bps

Written by: Staff

New Delhi, Apr 24 (UNI) State Bank of India (SBI) is considering an increase in home loan rates by 25 bps to 50 bps (basis points).

"We are reviewing our home loan portfolio for both fixed and floating rates. It is difficult to give a time frame when the rates would be changed or the quantum of the increase", SBI CMD A K Purwar told newpersons after a meeting of four Public Sector Bank Chiefs with Finance Minister P Chidambaram in the North Block.

"We are looking at the current market conditions. The increase could be 25 bps to 50 bps", Mr Purwar said.

The meeting was convened by the Finance Minister in the backdrop of the tight liquidity situation and also to discuss ways and means to increase lending to farmers at a rate of interest of seven per cent announced in the Budget 2006-07.

The Finance Minister discussed in detail the prospects of enabling Banks to extend loans to farmers for the coming Kharif at seven per cent rate of interest.

The government has decided to provide short term credit to farmers at this rate of interest with an upper limit of Rs 3 lakhs on the Principal amount.

The meeting also took stock of the overall interest rate scenario and discussed the issue of raising sufficient capital by the Banks to sustain the growth momentum.

Public Sector Banks will have to raise an additional capital of Rs 100,000 crore over the next five years for meeting their credit requirements as well as meet new adequacy norms under Basel 11.

The CMD of the other Banks which attended the meeting were Bank of Baroda, Punjab National Bank and Canara Bank.


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