Mumbai, Aug 24: In a bid to retain fixed rate home loan customers, who are paying higher interest, State Bank of India (SBI) has decided to provide them a one time option to switch over to prevailing fixed or floating rates. "Those fixed rate customers who have taken home loans at higher interest of 10-12 per cent or even higher in some cases can now benefit by converting their loans to existing fixed rate or floating rate by paying a charge of two per cent of their outstanding loan amount", a senior SBI official told a news agency here today.

This scheme, which has been devised to retain these customers and avoid them from switching over to other banks, would be available till December 31, 2003, he said. At present, the fixed rate home loan portfolio of the country's largest banking entity was around Rs 800 crore, the official added.

The interest rate in this category were 12 per cent and above for year ended March 2001, 12-12.5 per cent as at March 2002 and between 9.5 to 11.5 per cent in previous fiscal.


The prevailing floating interest rate was pegged at eight per cent for upto five years, 8.75 per cent for five to 10 years and 9.25 per cent for 10 years and above. The fixed rate is 0.25 per cent higher in all categories than that offered on floating rate basis.

Bureau Report