SBI feels rate cut pinch, brings back processing fees for home loans

Processing fees were waived off for the rest of the year due to festive season

SBI puts up 11 NPA accounts for sale to recover Rs 1,019 crore [File] SBI will be charging a processing fee of around 0.4 per cent | Reuters

Public sector lender State Bank of India has restored its processing fees for home loans, which was waived off for the rest of the year due to festive season. "The full waiver of consolidated processing fee offered during the festival period for loan proposals sourced up to December 31, 2019 is withdrawn. Waiver will continue for proposals sourced up to October 15," the Times of India reported citing an internal circular from SBI.

As a result, the country's largest lender will charge processing fees for home loans, top-up plans and loans to corporates and builders after October 15. The SBI move comes after the bank saw sharp dip in interest rates following the Reserve Bank of India's rate cut. SBI had linked its lending rates to repo rate and introduced floating rate home loans since July. 

The bank will be charging a processing fee of around 0.4 per cent, which would translate to about Rs 10,000 to Rs 30,000 for individual borrowers. For builders, a flat charge of Rs 5,000 has been reintroduced, the report said. 

The SBI had on Wednesday revised its marginal cost of funds-based lending (MCLR) rates by a marginal 10 basis points across all tenors but steeply revised down the pricing on savings deposits under Rs 1 lakh by a 25 bps to 3.25 per cent. "In view of the festival season and extending the benefits to customers across all segments, we have reduced our MCLR by 10 bps across all tenors," the bank said in a statement.

The bank further said in view of the adequate liquidity in the system, it has also revised interest rate on savings bank deposits (with balances up to Rs 1 lakh) from 3.50 percent to 3.25 percent effective November 1.

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