India's largest lender, State Bank of India has removed 25 basis point mark-up charged on retail customers on loans to buy a third or a fourth house.
As the corporate loan growth has become too sluggish, SBI has taken this step to thrust on retail loans, especially home loans.
SBI's current rates on home loans are 10 percent for loans up to Rs 30 lakh and 10.15 for loans above Rs 30 lakh. Banks normally charges higher interest rate if they take a loan to buy a house for the third time.
Bankers say they have come across cases where customers owning ancestral property take a loan to buy a house in the city they work. And they are ready to take a second loan to buy property on repaying the first loan.
A senior bank official said that the decision to give loan to buy home, be it first or third solely depends on the borrower's income and ability to repay.
If the customer has repaid the two earlier loans on time, then probability of default comes down and the customer is considered safe for the bank.