SBI-LD RATE 2LST

The base rate system will be applicable for all new loans
and also existing loans that come up for renewal. Existing
loans based on the BPLR system may continue till maturity of
the existing contract.
However, existing borrowers have the option to switch
over to the base rate system before the renewal or expiry of
the existing contract without any charges, PNB said in a
statement.
Central Bank of India Executive Director Ramnath Pradeep
said, "We have taken 180-269 days deposit cost for arriving at
base rate (8 per cent)."
The new system, however, could hurt corporate borrowers,
which used to get loans much below the declared BPLR on the
basis of their credit profile, said Corporation Bank Executive
Director Asit Pal.
"I don't expect any major impact, either on our growth
or profitability, because of the base rate coming in," HDFC
Bank Executive Director Paresh Sukthankar said, but added that
there may be a rise in the rates on short-end corporate loans.
As regards the impact of the base rate -- which is 4.25
per cent lower than the existing BPLR of 11.75 per cent -- on
the bottomline of SBI, Bhatt said, "It (base rate) will not
have any major impact on our Net Interest Margin. Only 3 per
cent of our loans are offered below 7.5 per cent."
On the higher side, an SBI official explained, the
interest rates will not exceed 7 per cent over and above the
base rate.
Bhatt said the bank has the flexibility to change the
methodology to arrive at the base rate anytime during the next
six months, as permitted by the RBI, if it finds the base rate
not conducive in the changing market environment.
"If we realise that we are wrong or have doubts, we can
do that (change the methodology of computing base rate)...
that is quite possible. We do not know how the base rate
regime will play out. We do not know what (the rate) other
banks are coming out with," Bhatt said.
On continuation of teaser rates, Bhatt said the bank will
take a decision on such concessional loans by tomorrow.
As per the SBI scheme, for the first year, home loans
will carry eight per cent interest rate and for the second
and third years, they will attract nine per cent interest.
From the fourth year onwards, home loans up to Rs 50 lakh will
be charged 9.25 per cent interest, while higher loans will
carry 9.75 per cent interest.
Bhatt said the bank's special home loan scheme, even if
continued, does not violate the RBI norms on base rates, but
the bank is yet to decide whether to extend the scheme.
SBI had extended the special scheme till June 30 owing to
huge demand from its customers. The scheme was actually
supposed to end by April 30. PTI DU
KAB


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