India's largest lender, State Bank of India has seen 25 per cent of new customers are the customers who migrated from other banks as home loan portability is allowed at no extra cost to the customers willing to shift their home loanto other banks.

Last year, the Indian Banks' Association following RBI's suggestion asked its member banks to waive off the pre-payment penalty on floating rate home loans which encouraged customers to switch banks and take advantage of lower interest rates.

State Bank of India's home loan rate is lowest among large lenders at 10 per cent for Rs30 lakh loan. SBI also have the lowest base rate at 9.75 per cent.

Earlier in October, RBI issued a circular to abolish pre payment penalty for all banks.

SBI has also lowered the spread it charges from the auto and home loan customers as the bank is trying to increase its retail credit growth. Spread is the difference between the base rate and the actual rate which the bank lends to the borrowers.

SBI is targeting to increase its home loan segment by 30 per cent in the current financial year as compared to 16-18 per cent overall loan growth. Following the rate reduction, home loans disbursals of SBI have increased almost by 3 times to Rs 150 crore per day.