Finance Minister Chidambaran to the rescue of realtors

Finance Minister P. Chidambaram asked public sector banks not to increase interest rates on home loans up to Rs3mn (both old and new) and lend more to consumers even as the Reserve Bank of India (RBI) is trying to moderate credit growth to contain inflation. Most public sector banks have increased their benchmark primary lending rate (PLR) by 75 to 100 basis points, but agreed not to raise interest rates on existing home loans, auto loans and education loans.

PSBs have agreed not to increase home loan rates with existing Home loans costing around 9-10 per cent (floating) and 11 per cent (fixed), with rates and tenure varying across banks. Allaying fears of high rate of default among home loan customers, the Finance Minister said banks have reported around 99 per cent recovery in home loans. He said only a few fraudulent borrowers in home loan segment were causing an increase in non-performing assets.