Axis Bank cuts interest rates on loans for affordable housing

MUMBAI: Axis Bank, India’s third largest private sector lender, has slashed rates on fixed interest home loans for affordable housing to 10.40 per cent while maintaining the rate at 11.75 per cent for a tenure of 20 years for properties that do not fall within the definition of affordable housing, reports Our Bureau.

“We had made no such differential before. However, the central bank earlier this year incentivised banks to participate in infrastructure and affordable housing,” said Jairam Sridharan, president, retail lending and payments, Axis Bank. Sridharan said that the bank had recently raised Rs 5,700 crore through issue of bonds under the new RBI rules for lending to infrastructure and affordable housing projects. “We decided to pass on the interest rate benefit to customers,” he said, referring to the bonds raised by the bank at 8.85 per cent, while ruling out any possibility of further softening of lending rates until April 2015.

The bank had cut its base rate by 10 basis points in October to 10.15 per cent. One basis point is equal to a hundredth of a percentage. Under the affordable housing scheme, self-employed professionals will get the loan at interest rates starting from 10.65 per cent while salaried individuals will be charged 10.40 per cent. The bank will offer a maximum loan amount of Rs 50 lakh for properties situated in metros and Rs 40 lakh for those situated in other locations.

The property value has been capped at Rs 65 lakh in metros andRs 50 lakh in non-metros. The bank charges a floating rate of 10.15 per cent to 10.90 per cent, depending on the tenure and quantum of the loan availed. Axis Bank has a home loan portfolio of Rs 48,000 crore and loans worth Rs 24,000 crore are offered for affordable housing projects.