After second cut, SBI offers cheapest home loans to women at 9.85 per cent

State Bank of India (SBI) has announced a further reduction of 10 basis points in its home loan rate - the second reduction in four days - reclaiming its position as the cheapest home loan provider.

New borrowers at the country's largest state-run lender will get loans at 9.85 per cent (for women) and 9.9 per cent (for others).

The move comes after housing finance firm HDFC on Friday announced revised home loan rate of 9.9 per cent.

"SBI has always been competitive in home loans. We were providing new borrowers some concessions in the form of lower processing fees earlier. These concessions came to an end in March and we, therefore, decided to come out with some support for borrowers," J Lakshmi, CGM, SBI, told the Economic Times.

"Those who choose to refinance their existing home loans with SBI can do it under the new rates," said Lakshmi.

According to the report, the current borrowers of SBI will have to pay 0.5 per cent of the outstanding amount to get their loans refinanced at the revised rates while borrowers with loans from other banks will have to pay the stamp duty on the mortgage document.

Since the lender is already offering new loans at its base rate of 9.85 per cent, a further relief for borrowers is likely only if SBI cuts its base rate.

The persisting downturn since late 2008 has been hard on the banking industry, which found the number of its defaulters and size of its non-performing assets steadily increasing. Accordingly, it chose caution over profitability, growing much more discriminating with all kinds of loans, especially retail loans - housing, vehicle, personal, consumer durables.

However, the fight for retail business has picked up against the backdrop of sluggish growth in credit. With fresh investments by corporates not picking up, banks are gearing up to push retail loans.