India - PSU banks cut rates on home loans up to Rs 20 lakh

Public sector banks today announced that home loans up to Rs five lakh would be given at a maximum interest rate of 8.5 per cent, while those between Rs 5-20 lakh would be offered at 9.25 per cent.

Besides, the banks would not charge any processing fees and pre-payment charges for loans up to Rs 20 lakh, and would also provide free insurance cover, the Indian Banks Association (IBA) said on Monday.

"Today's measures are intended to support the recent Reserve Bank and Government measures to boost the economy," IBA Chairman T S Narayanasami said.

The IBA has also announced measures to boost the small and medium micro enterprises sector.

Banks have decided to cut lending rates for micro industries by 1 per cent for both existing and new loans, with immediate effect.

Interest rates for SMEs up to Rs 10 crore have also been reduced by 0.50 percentage points, with immediate effect, and banks would also take up a second restructuring of SME accounts on a case-to-case basis.

The moratorium period will be extended in respect of loans availed by MSMEs, where project implementation has been delayed in the current scenario of economic downturn.

The IBA said that public sector banks would provide finance for purchase of gensets on soft terms.

For units unable to repay term loans on time, repayment would be rescheduled on a case-to-case basis, while receivables up to six months would be reckoned for book debt financing.

Banks would also grant need-based ad hoc working capital loans up to 20 per cent of the existing fund-based limits of MSMEs having overall fund-based credit facility up to Rs 10 crore.