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To attract prospective home loan customers with good credit standing, IDBI Bank is planning to come up with a product whereby concessions on interest rates will get deeper as their credit score gets higher.
The public sector bank is working on risk-based pricing for home loans based on customers’ credit score.
“A home loan customer with credit score between 700 and 750 will get some concession on the card rate. Those with credit scores between 750 and 800, and above 800 will get further concessions,” said Inderpal S Kalra, Executive Director.
To ramp up its home loan portfolio, which has seen 8 per cent growth in the first nine months of the financial year so far against 3 per cent in FY17 (full financial year), the bank has embarked on an aggressive campaign to penetrate the home loan market, including offering government employees and salaried payroll customers home loans about 10 basis points lower than the card rate.
Kalra said with the new offers, IDBI Bank will end FY18 with a home loan growth of 15-20 per cent. He added that the bank is also exploring the possibility of venturing into two-wheeler loans. The senior IDBI Bank official emphasised that amongst public sector banks his bank has a unique model for the retail structured products business, whereby it operates through branch and other channels (direct sales agents and direct sales teams) to market its products and retail asset processing centres at the back-end.
“While we are getting business from other channels, we are also giving due thrust to sourcing of loans through our branches.…. This will basically result in reduction of sourcing costs. So, we are activating branches to do this kind of business,” explained Kalra, adding that branches work in close co-ordination with DSAs and DSTs.
Right now, about 60 per cent of the structured retail asset business comes from other channels and balance from branches (last year, this proportion was roughly 65:45).
“While we are encouraging our DSAs and DSTs as well because we are hungry for new business, our branches have to also match up. Activation of branches will help in garnering additional business. As we go along, say, a year from now, if the proportion of business changes to 50:50, we will be happy. It will reduce our costs,” said Kalra.
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