Canara Bank cuts MCLRs by 0.05-0.15% for various tenors – ET RealEstate

NEW DELHI: State-owned Canara Bank on Friday said it has cut the marginal cost of fund based lending rates (MCLR) by 0.05-0.15 per cent with effect from November 7. The one-year MCLR — the benchmark for most of the consumer loans — has been reduced by 0.05 per cent to 7.35 per cent from 7.40 per cent currently, Canara Bank said in a regulatory filing.

The six-month MCLR too has been lowered by a similar quantum to 7.30 per cent. Among others, the overnight and one-month MCLRs are cut by 0.15 per cent each to 6.80 per cent, while the three-month MCLR stands revised to 6.95 per cent, against 7.10 per cent.

The new rates will come to effect from November 7, 2020, Canara Bank said.

On Thursday, Indian Overseas Bank had announced to cut the one, two and three-year MCLRs by 0.05 per cent each to 7.45 per cent.

The overnight and one-month MCLR will be priced at 6.85 per cent each from 7.05 per cent and 7.35 per cent, respectively, at present.

The new rates will come to effect from November 10, 2020, Indian Overseas Bank had said.

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RBI to rationalise risk weightage on housing loans to push demand – ET RealEstate

MUMBAI: In order to promote the housing sector, Reserve Bank of India on Friday decided to rationalise risk weightage on housing loans, making the product attractive for both borrower and lenders.

With revision in the risk weightage, the requirement of capital provision for banks will come down. This will encourage banks to push housing loan products with attractive features.

“Recognising the criticality of the real estate sector in the economic recovery, given its role in employment generation and the interlinkages with other industries, it has been decided, as a countercyclical measure, to rationalise the risk weights by linking them only with Loan to Value (LTV) ratios for all new housing loans sanctioned up to March 31, 2022,” RBI Governor Shaktikanta Das said.

Such loans shall attract a risk weight of 35 per cent where LTV is less than or equal to 80 per cent, and a risk weight of 50 per cent where LTV is more than 80 per cent but less than or equal to 90 per cent, he said.

This measure is expected to give a fillip to bank lending to the real estate sector, the statement on Developmental and Regulatory Policies said.

According to a Bank of India senior official, the RBI’s move will give a major boost to the housing sector particularly the retail housing.

“Banks will definitely be benefited with lower provisioning by lending to this segment which will ultimately encourage banks to make this product more price attractive,” the official said.

Commenting on the decision, Group CEO Dhruv Agarwala said rationalising risk weightage on home loans and linking it to LTV ratio will effectively result in higher credit flow to the real estate sector, which is positive news for the sector.

Also, the hike in credit limit for retail exposure by a single lending entity from Rs 5 crore to Rs 7.5 crore is a welcome move that will immensely help both retail as well as small businesses, he said.

As per the present RBI instructions, the exposures included in the regulatory retail portfolio of banks are assigned a risk weight of 75 per cent.

For this purpose, the qualifying exposures need to meet certain specified criteria, including low value of individual exposures. In terms of the value of exposures, it has been prescribed that the maximum aggregated retail exposure to one counterparty should not exceed the absolute threshold limit of Rs 5 crore, the statement said.

“In order to reduce the cost of credit for this segment consisting of individuals and small businesses (with turnover of up to Rs 50 crore), and in harmonisation with the Basel guidelines, it has been decided to increase this threshold to Rs 7.5 crore in respect of all fresh as well as incremental qualifying exposures,” it said.

This measure is expected to increase the much needed credit flow to the small business segment, it said.

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SBI offers up to two years repayment relief for home & retail loans – ET RealEstate

MUMBAI: State Bank of India will provide relief to home and retail loan borrowers impacted by Covid-19 in the form of either a moratorium of up to 24 months or by rescheduling instalments and extending the tenure by a period equivalent to the moratorium granted.

The moratorium period can be extended by a maximum of 2 years, India’s largest lender said Monday, setting the tone for other banks, specially PSU players.

In line with RBI’s one-time relief, the scheme is available to borrowers who had availed of a home loan before March 1, 2020 and were regular in repayments until the Covid-19 lockdown.

But the borrowers will have to demonstrate that their income has been hit because of the pandemic.

“For the purpose of restructuring, the bank will depend entirely on the customer’s assessment of when they expect their income to be normalised or to get employed,” said SBI managing director C S Setty said while announcing the scheme.

The country’s largest lender has been the first to roll out a protocol for restructuring loans of retail borrowers who were affected by Covid-19. Other lenders including HDFC and ICICI Bank are expected to follow suit before the end of the month.

To facilitate borrowers to understand their eligibility for restructuring, SBI has launched an online portal to enable borrowers check their eligibility for all retail loans. This includes home, education, auto, and other personal loans.

The restructuring will give breathing space for a borrower until their income is normalised or they get re-employed. Also, they will not be classified as defaulters or non-performing assets. The downside is that the bank will charge 35 basis points extra as interest since the RBI needs them to set aside additional provisions for these loans. This means that despite initial relief over the tenure of the loan, the borrower will end up paying more than on a regular loan without restructuring.
SBI offers up to two years repayment relief for home & retail loans“We have put in place a scheme for restructuring and it is available to borrowers through our internal portal. We have also intimated borrowers but don’t expect much of traction for restructuring given the inquiries,” said Rajkiran Rai, MD & CEO, Union Bank of India.

HDFC Bank has put in place a facility to submit online applications. The bank has said that it will report the loan to the credit bureau as ‘restructured’ and as per norms, all loans availed will be classified as restructured even if only one loan is being restructured.

“The dues for the moratorium period can be capitalised. Or else it will be very strenuous for the borrower to repay. Capitalising the dues will reduce the pressure on the borrower and we are also working on this by elongating the term of the loan,” said Siddhartha Mohanty, MD & CEO, LIC Housing Finance. He added that even if the loan term is extended, typically home loan borrowers end up pre-paying their loans by seven to ten years.

Borrowers who access SBI’s portal for restructuring will still have to visit the branch as a ‘wet signature’ is required for the loan document to be reworked. The portal will however take care of all the queries of the borrower. “It is not an end-to-end process but it will reduce the need for customers to visit branches especially during this time of Covid,” said Setty.

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Bank of Maharashtra slashes MCLR by up to 20 bps for select tenors – ET RealEstate

MUMBAI: State-owned Bank of Maharashtra on Friday said it has slashed marginal cost of funds-based lending rates (MCLR) by up to 20 basis points (bps) for select tenors effective today. This is the fifth consecutive MCLR cut by the Pune-based lender.

One year MCLR rate has been reduced by 10 bps to 7.40 per cent from 7.50 per cent, the bank said in a release.

The lender has reduced its overnight rate to 6.80 per cent from 7 per cent earlier, and one-month MCLR to 6.90 per cent from 7.10 per cent.

Besides MCLR, the bank has also cut its interest rate on gold loans offered to farmers and retail customers.

Farmers can get the agricultural gold loan on one-year MCLR at 7.40 per cent as against 7.80 per cent earlier.

The retail gold loan rate has been reduced to 7.50 per cent from 8 per cent, the bank said.

“The gold loan interest rates have been revised to meet the needs of farmers and retail customers at a cheaper cost considering the prevailing pandemic situation,” the bank said.

Bank of Maharashtra slashes MCLR by up to 20 bps for select tenorsAnother public sector lender Indian Overseas Bank (IOB) also announced that it will reduce its MCLR by 10 basis across all tenors from August 10.

The bank has cut its one year MCLR to 7.65 per cent from 7.75 per cent, as per the filing to exchanges.

Overnight MCLR has been revised downwards to 7.20 per cent from 7.30 per cent, while the six month rate has been cut to 7.55 per cent from 7.65 per cent.

Two-year MCLR of IOB has been reduced to 7.65 per cent from 7.75 per cent.

The Chennai-headquartered lender has also decided to reduce its base rate to 9.35 per cent from the existing of 9.45 per cent, effective August 10.

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