MUMBAI: Under pressure from the government, Indian public-sector banks have agreed to cut interest rates on home loans to about 8% for loans less than Rs20 lakh. Top bankers and finance ministry officials met on Thursday in New Delhi, where the bankers agreed to lower rates not only on home loans but also for loans to small and medium enterprises.
As many as 80% of India’s home loan borrowers have taken less than Rs20 lakh as loan. Floating interest rates stand at 11% now.
“The package for home loans and small and medium enterprises will be out in a day or two,” said TS Narayanasami, chairman, Indian Banks’ Association (IBA) and Bank of India. “Besides moderation in interest rates, it will include concessions like waiver of processing fees.”
Private home loan players don’t seem too worried, because falling property prices mean public-sector banks are forced to ask for greater investment commitment from customers.
