The Hindu Business Line : SBH mulls reducing interest rates on home loans

The bank is currently examining the re-pricing and up to 50 basis point reduction in rates is possible, Mr Amitabha Guha, Managing Director, SBH, told Business Line.

The bank feels that re-pricing could pep up its home loan segment which is currently going through a low. “The home loan off-take is a little slow now. We disbursed Rs 230 crore till now against a target of Rs 1,000 crore for the year. This was due to sluggishness in the segment,” Mr Guha said.

The high interest rates and lack of affordable housing in metros and major cities such as Hyderabad had a negative impact on the market. “Further, many who are buying homes for investment sake are now hesitating to do so,” he observed. A reduction in home loan rates would also make sense in view of the competition, he added.

“This month, we are launching a housing loan campaign with an offer of 50 basis points reduction in rates. The re-pricing could be in a similar range,” the official said. Currently, SBH home loan rates (as revised on April 1, 2007) range from 10 per cent to 11.5 per cent on a floating basis.

On the likely merger of SBH with State Bank of India, Mr Guha said so far there was no concrete plan. “There is no roadmap for SBH merger with SBI till now,” he said.

Funds sufficient

On fund-raising, Mr Guha said the bank had sufficient funds till March, 2008. “Capital structure-wise we are comfortable. Even after factoring in Basel – II norms compliance, our capital adequacy ratio would be at 10.50 per cent by March, 2008 as against the existing 11.70 per cent,” he pointed out.

The bank is also expanding its reach. “By March 2008, we will take our branch and exclusive ATM strength to 1,000 and 500 from the current 968 and 400 respectively,” he said. The bank would recruit 400 people, including 100 officers, over the next six months, he added.

On the efforts to improve business, Mr Guha said: “We are focusing on customer-driven solutions and products and there has been good response to our initiatives so far.”

In a month-long campaign on deposit mobilisation last month, SBH had opened 4.18 lakh new accounts with a turnover of Rs 2,245 crore.

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