Home loan interest rates linked to repo rate

Here are the interest rate on home loans charged by the banks under the external benchmark regime. The interest rate is liked to the RBI repo rate. The table given below is applicable to salaried individuals and self-employed persons.

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As leading interest rates are linked to an external benchmark, banks are required to reset the interest rates at least once in three months.
Interest rates on home loans offered by banks are now linked to an external benchmark. This is because the Reserve Bank of India (RBI) has asked all scheduled commercial banks (except regional rural banks), local area banks and small finance banks to link interest rates on retail and MSME loans to an external benchmark rate with effect from October 1, 2019.

RBI, in its circular, has directed banks to link their retail lending interest rates to any of the following external benchmarks:

  • RBI's repo rate
  • Government of India 3-months Treasury bill yield published by Financial Benchmarks India Pvt. Ltd. (FBIL)
  • Government of India 6-months Treasury bill yield published by FBIL
  • Any other benchmark market interest rate published by the FBIL


Most banks have chosen RBI's repo rate as their choice of external benchmark. The lending interest rate linked to repo rate is known as Repo Rate Linked Lending Rate (RLLR). RLLR is made up of RBI's repo rate plus spread or margin

RLLR = Repo rate + Margin charged by the bank.

Currently, the repo rate is 5.15 per cent.

The margin charged by a bank will remain same for all home loan takers, however, as per the RBI circular, banks are allowed to charge a risk premium from borrowers. Risk premium charged by the bank will depend on how risky your bank perceives you to be and will therefore vary from one borrower to another.

Here are home loan interest rates offered by top banks for salaried individuals
BANK RLLR Minimum Interest rate** Maximum Interest rate
Punjab National Bank 7.80 7.90 8.70
SBI Term Loan 7.80 7.95 8.30
United Bank of India 7.70 8.00 8.15
Syndicate Bank 7.85 8.00 8.60
Oriental Bank of Commerce 7.95 8.00 8.35
Bank of Baroda 8.00 8.00 9.15
Bank of India 8.00 8.00 8.30
Central Bank of India 8.00 8.00 8.10
Union Bank of India 8.00 8.05 8.35
Canara Bank 8.05 8.05 10.05
UCO Bank 8.05 8.05 8.15
Punjab & Sind Bank 8.05 8.05 8.40
Corporation Bank 7.90 8.10 8.35
Andhra Bank 8.10 8.15 9.30
SBI Max Gain 7.80 8.20 8.55
Indian Bank 7.95 8.20 9.50
Karur Vysya Bank 7.95 8.20 10.05
Indian Overseas Bank 8.00 8.20 8.45
Bank of Maharashtra 8.20 8.20 9.00
Allahabad Bank 8.25 8.25 8.85
ICICI Bank 8.25 8.25 9.25
IDBI Bank 8.25 8.25 8.60
Axis Bank 8.55 8.55 9.20
Federal Bank 8.55 8.55 8.65
Kotak Mahindra Bank 8.60 8.60 9.30
South Indian Bank 8.80 8.80 10.05
Dhanlaxmi Bank 7.93 8.85 9.95
Lakshmi Vilas Bank 7.85 9.70 9.70
*PNB charges 0.35 per cent as processing fees; minimum Rs 2,500 and maximum Rs 15,000
* SBI charges a premium of 0.10 percent is added for loan up to Rs 30 lakh if LTV is >80% & <=90% in the processing fees.
*United Bank of India charges one per cent as processing fees; minimum Rs 55,000.
*Oriental Bank of Commerce charges 0.40 per cent - 0.60 per cent as processing fees; maximum Rs 45,000
*Bank of India charges 0.25 per cent of loan; minimum Rs 1,500 and maximum Rs 20,000
*Central Bank of India charges 0.50% as proccessing fees subject to maximum up to Rs 20,000
*Canara Bank charges 0.50 per cent as processing fees; minimum Rs 1,500 and maximum Rs 10,000
*UCO Bank charges 0.5% of the loan amount, minimum Rs 1500 & maximum Rs 15,000.
*Corporation Bank charges 0.50 per cent of loan as processing fees; maximum Rs 50,000
* Andhra Bank charges 0.50 per cent of loan amount as processing fees subject to maximum of Rs 10,000 plus applicable tax.
*Indian Bank charges 0.230 per cent on loan amount as processing fees with maximum amount of Rs 20,470.
*Karur Vysya Bank charges maximum Rs 7,500 plus GST as procssing fees
*Indian Overseas Bank charges 0.50 per cent as processing fees maximum Rs 20,000.
*ICICI Bank charges 1% of loan amount as processing fees plus applicable taxes
*Kotak Mahindra Bank charges maximum two percent as processing fees plus GST and any other statutory charges
* South Indian Bank charges 0.50 per cent of loan amount; minimum Rs 5000 plus service tax; maximum Rs 10,000
*Dhanlaxmi Bank charges one per cent plus service tax as processing fees; minimum Rs 10000 plus service tax
** Sorted on minimum interest rate charged by the bank after adding risk premium


Here are home loan interest rats offered by top banks for self-employed individuals
BANK RLLR Minimum Interest rate** Maximum Interest rate
Punjab National Bank 7.80 7.90 8.70
SBI Max Gain 7.80 7.95 8.55
United Bank of India 7.70 8.00 8.15
Oriental Bank of Commerce 7.95 8.00 8.35
Bank of Baroda 8.00 8.00 9.15
Bank of India 8.00 8.00 8.90
Central Bank of India 8.00 8.00 8.10
SBI Term Loan 7.80 8.05 8.45
Syndicate Bank 7.85 8.05 8.70
Union Bank of India 8.00 8.05 8.35
Canara Bank 8.05 8.05 10.05
UCO Bank 8.05 8.05 8.15
Punjab & Sind Bank 8.05 8.05 8.40
Corporation Bank 7.90 8.10 8.35
Andhra Bank 8.10 8.15 9.30
Karur Vysya Bank 7.95 8.20 10.05
Indian Overseas Bank 8.00 8.20 8.45
Indian Bank 7.95 8.25 9.55
Allahabad Bank 8.25 8.25 8.85
Bank of Maharashtra 8.20 8.45 9.35
IDBI Bank 8.25 8.45 9.00
ICICI Bank 8.25 8.50 9.35
Federal Bank 8.55 8.60 8.70
Axis Bank 8.55 8.65 9.40
Kotak Mahindra Bank 8.60 8.65 9.30
South Indian Bank 8.80 8.80 10.05
Dhanlaxmi Bank 7.93 8.85 9.95
Lakshmi Vilas Bank 7.85 9.70 9.70
*PNB charges 0.35 per cent as processing fees; minimum Rs 2,500 and maximum Rs 15,000
* SBI charges a premium of 0.10 percent is added for loan up to Rs 30 lakh if LTV is >80% & <=90% in the processing fees.
*United Bank of India charges one per cent as processing fees; minimum Rs 55,000.
*Oriental Bank of Commerce charges 0.40 per cent - 0.60 per cent as processing fees; maximum Rs 45,000
*Bank of India charges 0.25 per cent of loan; minimum Rs 1,500 and maximum Rs 20,000
*Central Bank of India charges 0.50% as proccessing fees subject to maximum up to Rs 20,000
*Canara Bank charges 0.50 per cent as processing fees; minimum Rs 1,500 and maximum Rs 10,000
*UCO Bank charges 0.5% of the loan amount, minimum Rs 1500 & maximum Rs 15,000.
*Corporation Bank charges 0.50 per cent of loan as processing fees; maximum Rs 50,000
* Andhra Bank charges 0.50 per cent of loan amount as processing fees subject to maximum of Rs 10,000 plus applicable tax.
*Karur Vysya Bank charges maximum Rs 7,500 plus GST as procssing fees
*Indian Overseas Bank charges 0.50 per cent as processing fees maximum Rs 20,000.
*Indian Bank charges 0.230 per cent on loan amount as processing fees with maximum amount of Rs 20,470.
*ICICI Bank charges 1% of loan amount as processing fees plus applicable taxes
*Kotak Mahindra Bank charges maximum two percent as processing fees plus GST and any other statutory charges
* South Indian Bank charges 0.50 per cent of loan amount; minimum Rs 5000 plus service tax; maximum Rs 10,000
*Dhanlaxmi Bank charges one per cent plus service tax as processing fees; minimum Rs 10000 plus service tax

** Sorted on minimum interest rate charged by the bank after adding risk premium
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All data sourced from Economic Times Intelligence Group (ETIG)
Data as on March 26, 2020

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How will your EMI change in the new external benchmark linked lending rate regime?
To categorise the borrower on the basis of credit risk, some banks have internal risk assessment teams while others rely on credit scores to grade the risk of each borrower. As per RBI's circular, if your credit score undergoes substantial changes, the bank can revise the risk premium charged on the home loan.

Also Read: 5 lesser known things about credit score that can impact your home loan interest rates

As leading interest rates are linked to an external benchmark, banks are required to reset the interest rates at least once in three months. Therefore, any change in the external benchmark rate, will mandatorily have to be passed on to the borrower within three months of the change.

Also Read: How your EMI will be reset under external benchmark lending regime

Why RBI asked banks to link lending interest rates to an external benchmark
Under the previous marginal cost of lending rate (MCLR) regime, home loan borrowers and others often complained that banks did not pass on the benefit of a lower rate whenever RBI cut the key policy rates but often raised the interest rates quickly whenever policy rates were hiked. Linking the interest rates to an external benchmark is supposed to bring in more transparency and faster transmission of changes in key policy rates.

For any queries or changes, please write to us on etigdb@timesgroup.com or call us at 022 - 66353963
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