More banks to float special home loans schemes

After some of the leading banks such as State Bank of India, Punjab National Bank and Canara Bank two more banks are planning to float special home loan schemes in couple of weeks. The chief executives of the two banks – Pune based Bank of Maharashtra and Mangalore-based Corporation Bank told Financial Chronicle the final details of the scheme are being finalized by the two banks and will be announcing there schemes in couple of weeks.

Earlier leading banks — including State Bank of India, Punjab National Bank and Canara Bank has announced special home loan schemes, in which the interest rates in the initial years tend to be fixed. It is believed afterwards to become market-driven.

According to Allen Pereira, chairman and managing director of Bank of Maharashtra the new scheme will help in lining in targeted customers through discounts being offered on a case-to-case basis. He said, “After going through the profile of various customers, particularly the existing ones, we will approach them and offer them special discounts. We will also try to rope in creditworthy customers of another bank and give them similar discounts. But, the scheme most probably will be a universal scheme”.

Pereira informed bank’s aim will be to offer something different from other bank schemes. Pereira said, “The special home loan scheme, which we plan to launch in a week’s time, will not be duplication of the schemes launched by the major banks”.

In a reply to why Bank of Maharashtra is not offering schemes similar to that of State Bank of India and other leading banks, Pereira said, “Such schemes are likely to result in a higher NPA level as when interest rates harden at a later stage; it affects the paying capability of individuals, resulting in higher defaults.”

Currently Bank of Maharashtra is offering 9.25 per cent interest rate on floating basis on home loans up to Rs 30 lakh.

Corporation Bank informed that it is also on the final stage of process of finalizing the details of special home loan scheme.

JM Garg, chairman and managing director of Corporation Bank told, “We plan to launch a special home loan scheme soon, which would be comparable with other similar products in the market”.