The mad scramble to buy flats from Delhi Development Authority's latest housing scheme has sparked a no-holds-barred rate war among banks. State Bank of India has taken the lead by offering the cheapest loan for application money of Rs 1.5 lakh while almost all banks have joined the race for a slice of the Rs 500 crore of risk-free revenue that is to be generated in three months.
Interest rate offered by banks vary as much as 200 basis points in some cases and a wrong choice by a customer can push up the cost of the application finance by 30%. Most private players, including HDFC Bank, are charging Rs 6600 as interest and processing charge, while SBI is charging Rs 5050. This is the cost of availing a bank loan for the application among of Rs 1.5 lakh for a period of three months.
Rates at other public lenders like Union Bank and Central Bank are also lower than those of private banks. The gap between the rates offered by various banks would widen in case draw of lots by DDA for allotment of flats gets delayed. Interest rates charged for the delay may vary between 11%-14%, depending upon the policy of a particular bank.
"Though we started late, we expect to allocate highest number of loans because of the attractive interest rate being offered by us," a senior official in SBI said. The PSU bank is also publicising the loan offer prominently at its branches. IDBI Bank is charging Rs 6600 each for same loan, the same as HDFC Bank. Industry sources said Union Bank of India is charging Rs 5,700 while Central Bank of India is charging Rs 5,680.
Consumers need to be aware that they will have to pay additional interest to the bank if the DDA selection process gets delayed beyond three-and-a-half months, the sources said. ET
