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Name : Rajni Mathur
Subject: Why banks can charge different housing loan interest?
Message : The interest rates on advances above Rs.2 lakhs have been deregulated by Reserve Bank of India (RBI) and banks are free to fix the rate of interest themselves with the approval of their Boards.

Banks have been advised to fix their Bench­mark Prime Lending Rate (BPLR) after taking into account cost of funds, transactions cost, risk factor margin and other overhead expenses. However, banks are free to charge interest without reference to their Benchmark Prime Lending Rate (BPLR) and regardless of the size in respect of consumer loans and non-priority sector personal loans including home loans.

Only, Public Sector Banks and State Bank Of India are expected to have uniformity and lower interest rate on home loans, provided they are in a position to address the rebalancing of their credit portfolio.

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