Business | Banking
India's home loan interest rates set to be capped
India's state-run banks will cap the interest rate for home loans of up to Rs500,000 (Dh38,162) at 8.5 per cent, State Bank of India Chairman O.P. Bhatt said in a speech.
- Bloomberg
- Published: 23:46 December 15, 2008
Mumbai: India's state-run banks will cap the interest rate for home loans of up to Rs500,000 (Dh38,162) at 8.5 per cent, State Bank of India Chairman O.P. Bhatt said in a speech.
The interest rate will be set for five years, and borrowers will be required to pay 10 per cent of the value of the home loan as a down payment, Bhatt said yesterday, following meetings held by the chiefs of the nation's state-run banks. State Bank of India, controlled by the government, is the country's largest lender.
Reviving demand
India's government is aiming to revive housing demand as a weakening economy and higher borrowing costs curb home sales. The 14-stock Realty Index of the Bombay Stock Exchange has tumbled 82 per cent this year, outpacing a 51 per cent decline in the benchmark Sensex index.
Shares jump
Banks will cap mortgage rates at 9.25 per cent for borrowers seeking loans of less than 2 million rupees, Bhatt said. Shares of Unitech Ltd, Puravankara Projects Ltd, Housing Development & Infrastructure Ltd, Parsvnath Developers Ltd gained after Bhatt's comments.
Unitech jumped 10 per cent, the most in a week, to 37.75 rupees in Mumbai trading.
Puravankara advanced 11 per cent to Rs45.6 and Parsvnath gained 7.3 per cent to Rs46.95 at 12:05pm local time.
Funding: $14b loan for banks
A $14 billion (Dh51.42 billion) World Bank lending plan for India, the biggest ever by the global lender to Asia's third-largest economy, will help recapitalise state-run banks facing liquidity strains and target the country's poorest regions, a senior Bank official said.
In an interview, Rachid Benmessaoud, the Bank's acting country director to India, said some $3 billion of the loan will focus on areas most affected by the global financial crisis.
"The capital market is drying up in India and we have seen that a number of commercial state banks are not able to access long-term financing," Benmessaoud said on Friday.
- Reuters
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