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Saturday
October 2019
10:06 PM IST
News Headlines
Netherlands'' King Willem-Alexander , Queen Maxima, gets warm welcome in Alappuzha        PM Modi has no understanding of economy: Rahul        INX Media: Chidambaram conspired with son, misused official position, says CBI charge sheet        US dream shattered, 311 Indians land in Delhi after deportation from Mexico        US to host 2020 G7 summit at a Trump golf resort        Trump speaks over phone with Turkey''s Erdogan over cease-fire in Syria        Twin blasts in Afghanistan''s mosque kill 62        China''s Q3 GDP growth slows to 6%, slowest in 27 years        Ranchi Test: India eye clean sweep against Proteas        Pakistan sacks Sarfaraz as captain in Test, T20I formats        Mentally-unstable man jumps inside lion enclosure in Delhi zoo, escapes unhurt        BSF jawan killed, 1 injured in firing by Bangladeshi troops along border in West Bengal        At least 35 people killed in bus accident in western Saudi Arabia        UK, EU hail new Brexit deal, but Parliament sign-off hangs in balance        Nearly 100 people injured in Catalonia unrest on Wednesday: Medics        Indo-Pak bilateral ties subject to approval from PMs of both countries: Ganguly        Aiden Markram ruled out of Ranchi Test with wrist injury        Indian challenge ends at Denmark Open        Aussie cricketer Watson apologies for 'illicit' social media posts        India's performance was no match to atmosphere at Salt Lake: Chhetri        
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Business News
SBI to move RBI to offer fixed-floating rate home-loans: Chairman
 
Leh: The largest lender State Bank of India will be seeking clarifications from the Reserve Bank whether it can offer long-term home loans with fixed rates in the beginning and convert the same into floating rates later, chairman Rajnish Kumar has said.

The move comes after the Reserve Bank has mandated banks to shift all retail lending to floating rates that will be determined by external benchmarks like the repo rate.

Kumar said there is a lack of clarity on how it can go ahead with the fixed rate products, after the RBI's new regulations on floating rates.

Hinting at the volatility in the repo rate, he said some home buyers may want their loan rates to be fixed.

For such buyers, it can offer a 'fixed-floating' product, wherein the rates are locked in for an initial period of say five to ten years, and then turns floating.

The need for making the product floating in the latter part arises out of the bank's inability to project the liability movements in the future, he said, adding typically, home loans are for about 30 years.

It can be noted that the repo rate at which the central bank lends to the system is at a nine-year low of 5.40 per cent.

Speaking to reporters here over the weekend, Kumar said the central bank's recent guidelines on floating rate products for the retail segment has necessitated the need for the clarity.

Kumar has clarified that from an asset liability management perspective, it is difficult to have a fixed rate product for a long term like 30 years, the maximum tenor of a home loan now from the bank now. Some private sector peers offer up to 35 years of home loans depending on in the age of the borrower, though.

At present, SBI has a floating rate home loan product linked to its marginal cost of funds-based lending rate and it recently withdrew one linked to the repo rate. It does not have a fixed rate home loan product at present.

As of now, under the marginal cost of funds based lending, floating rate loans are re-set as when the interest rates fall or rise, but fixed rate loans are reset in 9-12 months. But when the loans are linked to the repo rate, the rates can change sharply, depending on how RBI acts on the rate front.

Many mortgage borrowers normally choose fixed rates, as that helps them better manage their finances because of the certainty about the EMI outgoes.

Kumar said the bank does not have adequate liabilities linked to the floating rate which makes such a floating product difficult.

Speaking on the RBI-mandated systemic shift to external benchmarked lending rates, he said SBI will have minimal issues with the same.

He said the industry leader was the first to move on to the repo-linked loans and deposits since May, and has many of its products aligned to the external benchmarks now.

However, he said such shifts make asset liability management "challenging" as there lack of floating rate liabilities now.

About the impact of the mega bank mergers on SBI, he said it will not impact the nation's largest bank as SBI has specified business model and target segments, and will continue with the same.


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KERALA NEWS
Netherlands'' King Willem-Alexander , Queen Maxima, gets warm welcome in Alappuzha
 Alappuzha: Netherlands'' King Willem-Alexander and Queen Maxima, who are on a two-day visit to Keral  
Scribe's death:Kerala IAS officer's suspension extended
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Kerala Assembly session from Oct 28
INTERNATIONAL NEWS
US to host 2020 G7 summit at a Trump golf resort
 Washington: The G7 Summit in 2020 would be held at President Donald Trump''s golf resort in Florida
Trump speaks over phone with Turkey''s Erdogan over cease-fire in Syria
Twin blasts in Afghanistan''s mosque kill 62
At least 35 people killed in bus accident in western Saudi Arabia
NATIONAL NEWS
PM Modi has no understanding of economy: Rahul
 Mahendragarh: Congress leader Rahul Gandhi on Friday alleged that Prime Minister Narendra Modi has n
US dream shattered, 311 Indians land in Delhi after deportation from Mexico
Mentally-unstable man jumps inside lion enclosure in Delhi zoo, escapes unhurt
Senior Odisha BJP leader Damodar Rout quits party
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