Name of company/service: State Bank of India
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.
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