Being hot favourite home loan vendor across the nation, SBI has made the home loan of above Rs 75 lakh cheaper by 0.10 percent (10 basis point). It will be effective from June 15, 2017.

For salaried women borrowers, the revised interest rates will be 8.55% while for others, the rate of interest will be 8.60% per annum.

The main factor behind the cheaper high-value loans is RBI’s reduced risk weightage on home loans. “Considering the importance of the housing sector and given its forward and backwards linkages to the economy, it has been decided as a countercyclical measure, to reduce the risk weight on certain categories. It has also been decided to reduce the standard asset provisioning on such loans,” the RBI had said on Wednesday after announcing its monetary policy.

“The decision to reduce the risk weights for home loans over Rs. 30 lakh category will release capital for the banking industry and is a positive move,” SBI Chairperson Arundhati Bhattacharya

For loans between Rs 30 lakh and Rs 75 lakh, a single LTV (loan to value) ratio slab of up to 80 percent, has been introduced by the RBI with a risk weight of 35 percent. LTV ratio is the maximum amount of loan that can be disbursed against the value of a property.

Last month SBI cut rates on home loans of up to Rs 30 lakh by 25 basis points (0.25 percent). The RBI on Wednesday kept key rates unchanged, as was widely expected while lowering its projections for inflation after recent data showed consumer prices rising more slowly.

SLR is cut by 50 basis points. As a part of financial securities, banks need to deposit a certain amount to Central or State Government. Percentage of this amount is known as SLR. The cut in SLR gives banks more liquidity which gives them room to cut rates.

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