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Home Loan Interest Rate

Location/place: Mumbai

Name of company/service: State Bank of India

Hi,

I had taken a SBI Homeloan (August 2011 Maxgain Product).

My loan agreement with the SBI clearly states of ‘no foreclosure/pre-payment charges’. The interest rate is linked to base rate (10% – unchanged since the time my loan was processed) and the interest rate is 11% (10% base rate + 1% margin).

SBI has launched a new product for its new customers with a reduced margin of 0.4% and hence, the loan interest rate can be worked out at 10.4%.

SBI is asking now to pay flat 1% of the total sanctioned amount at the branch for reducing the interest rate of existing customers.

This is a mockery of the RBI’s directives of introducing transparency in the loan rates and schemes and mockery of the philosophy behind introduction of base rates.

Even if one assumes taking a fresh loan with no termination charges, the processing cost is Rs.10000/- + 0.2% mortgage charges.

How can SBI justify a processing charge of 1% for switching from a floating rate product based on base rate to again a floating rate product based on base rate.

Move is completely anti-competitive and needs serious action by the ombudsman.

More details about the case can be provided – please write back at [email protected]

Thanks, Jaydip
Cell: +91-9930166606

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