Govt banks offer special rates on some home loans

State-run banks will offer special rates on some loans to home buyers and small businesses, as part of a government-led initiative to boost economic growth and shore up confidence amid a global liquidity crisis. Government-owned banks will offer home loans up to 500,000 rupees at 8.5 percent and between 500,000 to 2 million rupees at 9.25 percent, O.P. Bhatt, chairman of State Bank of India, said at a conference held by the Indian Banks Association The new home loan rates, part of a move to stimulate demand in the affordable housing segment, will be effective until June 30, 2009. Currently, loans in that category cost borrowers more than 10 percent. The banks will take a 10 percent margin on home loans up to 500,000 rupees and 15 percent margin on home loans up to 2 million rupees. They expect to disburse 150 billion to 200 billion rupees under the special home loan package by June 30, Bhatt said. The state run banks have also cut rates to micro businesses by 100 basis points, he added.