OBC hikes interest on home loans above Rs 20 lakhs

New Delhi, Aug 7 (UNI) The Oriental Bank of Commerce (OBC) today increased interest rates on home loans above Rs 20 lakhs, but kept in abeyance a decision to revise interest rates below this amount till September 30, 2006.

"A recent communication of the Finance Ministry asked the Public Sector Banks (PSB) that loan rate increases should be reviewed by the Board of Directors. The Board met in New Delhi today and decided that such a revision should be split into two parts--below Rs 20 Lakhs and above this amount", Oriental Bank of Commerce CMD K N Prithviraj told a reports here.

The next Board meeting is scheduled for September 30,2006, when the interest rate structure would be reviewed. At that meeting the Board will review the half yearly progress relating to various other parametres as well.

"It is for the first time that the Asset-Liability Commmittee of the Bank has kept an interest rate deicison in abeyance", he said.

The following is the revised rate of interest on housing loans with effect from today for home loans above Rs 20 lakhs: (1) Repayment upto 10 years: -- Floating interest rate hiked from 8.75 per cent to 9.75 per cent; -- Fixed interest rate increased from 9.50 per cent to 10.75 per cent; (2) Repayment above 10 years: -- Floating rate of interest increased from 9 per cent to 10 per cent; -- Fixed rate of interest will be 10.75 per cent, at present loans are not offered in this category.

Mr Prithviraj said total OBC credit lending of OBC is Rs 5,000, of which direct lending by the Bank is Rs 2,100 crore/ Loans upto Rs 15 lakhs total Rs 2,300 crore and above this level Rs 562 crore.

The CMD said the concern of the Board was with the small borrowers in the home loan category and wanted to protect them. Those who need a loan of more than Rs 20 lakhs are high net worth individuals and given the highly seculative market in real estate can well afford to pay higher rates of interest.

UNI GS RA ND1756