20 Aug 2020 | 3 min read
In a definite attempt to further strengthen its retail lending portfolio, the State Bank of India has announced a plethora of festive offers, just days ahead of the Ganesh Chaturthi on 2nd September. This will benefit retail customers across various loan categories - education loan, auto loan, home loan, and personal loan. Here, we will discuss what SBI customers have in store for them- across loan segments.
SBI auto loan festival offer will come as a welcome relief to struggling auto dealers as car sales have gone downhill of late. Last July, the passenger vehicle industry in India experienced its worst-ever performance since the year 2000 as sales plunged a whopping 31%. Many auto dealers are facing tough times in repaying loans on schedule. Now, the SBI festive offer to increase loan repayment time will provide a much-needed boost to auto dealers as it has an exposure of Rs 11,500 crore to them. As quoted by P.K. Gupta, the MD of SBI – “The repayment period normally is for 60 days. For some dealers, we have extended it to 75 days, and for a few others it will be 90 days”.
Still showering offers on auto loans, the processing fees on SBI car loans will also be waived off this festival season. The interest rate on SBI car loan will start from as low as 8.70%, with no further escalation. Customers applying online (through the SBI website and SBI YONO) will get a further concession of 25 bps ( 100 bps= 1 percentage pt) on the interest rate. The effective interest rate for these customers will be 8.45% only. Also, up to 90% of the on-road price of the car will be provided to salaried customers.
SBI personal loans will be available at 9.60% interest rate this festive season. Moreover, loans up to Rs 20 lakhs will now be available with a maximum repayment tenure of 6 years (as against the usual tenure of 5 years). In addition, customers having salary accounts in SBI will get pre-approved personal loans up to Rs 5 lakhs through the SBI YONO digital platform, with just 4 clicks.
SBI’s special festive offer on personal loans has arrived as a welcome measure, particularly when RBI is encouraging banks to reduce the risk weightage from 125% to 100% on consumer loans.
Ahead of this festive season, students in India are due to get SBI education loans up to Rs 50 lakhs. For Indian students planning to study abroad, education loans up to Rs 15 Crore will be on offer. The rate of interest in both these cases will start as low as 8.25%. The repayment tenure for these education loans will be 15 years, which is easily among the longest ones in the segment.
SBI claims to offer the ‘cheapest home loans’ in India. In April 2019, SBI reduced the MCLR (Marginal Cost of Lending Rate) by 15 bps. Therefore, the overall rate of interest on new home loans was brought down by 35 bps since then. Now, post the festive offer, SBI home loans will be available at 8.05%. The Bank said this will be available for both new and existing customers from the 1st of September.
This SBI home loan offer is no less than an eye-catching one. From the 1st of July this year, the SBI home loan product has been linked to the RLLR (Repo Rate Lending Rate) which changes as and when the repo rate of RBI is tweaked. A reduction in RBI's repo rate shortly will automatically result in lower interest rates for home loan borrowers. This will be a sharp contrast to the existing MCLR regime where every transmission happens with a time lag. SBI customers are likely to get a reduced rate as compared to the MCLR-linked home loan schemes from other banks.
There is a word of caution, though! As we know, a home loan is a product with longer tenures (20-25 years, in general). There will be a number of rate cycles during such a long tenure, and some of them may have upward trends too. Therefore, we would advise you not to make your borrowing decision based on this current reduction in rates only.