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About IDBI Bank

IDBI Bank Ltd has an illustrious history dating back to 1964 with the setting up of a Development Financial Institution (DFI) by the name Industrial Development Bank of India. This institution was transformed into a full-fledged bank in October 2004 with the formation of IDBI Ltd. The merger of United Western Bank with IDBI Ltd in 2006 further strengthened its presence in the banking industry. In May 2008, the institution changed its name to IDBI Bank Ltd. Two of its wholly-owned subsidiaries, IDBI Home Finance Ltd and IDBI Gilts Ltd merged into IDBI Bank Ltd in April 2011. Life Insurance Corporation of India (LIC) completed its acquisition of 51% stake in IDBI in January 2019. Now, the Government of India has re-categorised the bank as a private sector bank with retrospective effect from January 21, 2019. A name change is also due.

IDBI Bank Home Loan

IDBI Bank Ltd has several loan products in the Personal, Corporate, MSME, Agri, and NRI segment, of which the Home Loan is one of the most prominent. IDBI Bank Ltd has an extended Home Loan portfolio that offers different types of Home Loans. It includes loans for direct purchase of home or flat. Loans for construction of houses or purchasing houses under construction are also available. There are different Home Loan products for home extension and improvement. Balance transfer of Home Loan from other institutions and Top-Up facilities are possible. IDBI Bank caters to an entire gamut of clients ranging from salaried employees to self-employed individuals and professionals. One of the highlights of IDBI Bank Ltd Home Loan is the attractive rate of interest.

IDBI Bank Home Loan Interest Rate

IDBI Bank offers fixed as well as floating interest rates on Home Loans. The bank links its floating interest rate to its Marginal Cost of Funds-linked Lending Rate (MCLR). The MCLR-linked interest rate is applicable from April 01, 2016.

From September 10, 2019, the bank has announced a new product, the Repo Rate Linked Lending Rate Home Loan (RLLR). The RLLR is an accurate indication of the market position. Customers availing this product can get the entire benefit of the market rate fluctuations.

Apart from the RLLR and MCLR rates, IDBI Bank has a Base Rate and Benchmark Prime Lending Rate (BPLR) structure as well for its existing customers.

  • IDBI Bank Ltd Base Rate: 9.65% with effect from April 12, 2019
  • IDBI Bank BPLR: 14.15% with effect from April 12, 2019
  • Customers who maintain Home Loans with interest rates linked to Base Rate and BPLR can switch over to the MCLR by paying a conversion fee.

IDBI Bank MCLR Concept

The MCLR concept came into effect from April 01, 2016. All loans sanctioned after this date have interest rates linked to the bank's MCLR. The MCLR is a real indication of the market rates as it considers different factors for its computation. These factors include:

  • Marginal Cost of Funds
  • Negative Carry because of the Cash Reserve Ratio
  • Operating Cost
  • Tenure Premium

The bank loads a premium on the MCLR before affixing the interest rate on the Home Loan.

The MCLR of IDBI Bank with effect from August 12, 2019, is as follows:

Tenor MCLR

Overnight MCLR

7.85%

(1M) One month MCLR

8.10%

(Q) Three-month MCLR

8.35%

(HY) Six-month MCLR

8.50%

(Y) One year MCLR

8.85%

(2Y) Two-year MCLR

8.95%

(3Y) Three-year MCLR

9.10%

IDBI Bank Home Loan Interest Table

MCLR-linked Floating Rate of Interest

Home Loan - Pure Vanilla (HL)

Loan Amount Range

Salaried Persons

Self Employed Professionals

Self Employed Non-Professionals

Men/Women

 

 

Up to 35 Lakhs

6M MCLR + 0.10% = 8.60%

6M MCLR + 0.15% = 8.65%

6M MCLR + 0.20% = 8.70%

More than 35 Lakhs and up to 75 Lakhs

6M MCLR + 0.30% = 8.80%

6M MCLR + 0.35% = 8.85%

6M MCLR + 0.40% = 8.90%

More than 75 Lakhs and up to 1.25 Crores

6M MCLR + 0.40% = 8.90%

6M MCLR + 0.45% = 8.95%

6M MCLR + 0.55% = 9.05%

Above 1.25 Crores

6M MCLR + 0.80% = 9.30%

  • Women borrowers under self-employed professionals and non-professionals categories get a benefit of 0.05% on the card rates.
Home Loan Interest Saver Account - HLIS

All Loan Amounts

One year MCLR + 0.35% = 9.20%

IDBI NEEV - Plot Loan for Construction of House

Loan Amount Range

NEEV

NEEV 2.0

Up to 35 Lakhs

One year MCLR + 0.45% = 9.30%

One year MCLR + 0.75% = 9.60%

More than 35 Lakhs and up to 75 Lakhs

One year MCLR + 0.70% = 9.55%

One year MCLR + 1% = 9.85%

Above 75 Lakhs

One year MCLR + 0.95% = 9.75%

One year MCLR + 1.25% = 10.10%

Home Loan Scheme for financing Rural/Semi Urban Housing

Loan Amount

Salaried (Men/Women)

Self Employed Professionals

Self Employed Non-Professionals

Up to 35 Lakhs

6M MCLR + 0.15% = 8.65%

6M MCLR + 0.20% = 8.70%

6M MCLR + 0.25% = 8.75%

  • Women borrowers under the self-employed professionals and non-professional categories get a concession of 0.05% over the card rates.
Top-Up Loans for Home Loan customers - for amounts up to 100% of the original Home Loan sanction amount

For housing purposes

Existing Home Loan product rate + 0.10%

For non-housing purposes

Existing Home Loan product rate + 0.20%

Repo Rate Linked Home Loan rates - with effect from September 10, 2019

Repo Rate-Linked Home Loan Interest Rate - for loans up to 75 Lakhs

Credit Score of the borrower

Rate of Interest - Floating rate

750 and above

RLLR + 0%

8.30%

650 to 749

RLLR + 0.10%

8.40%

-1, and 1 to 5

RLLR + 0.15%

8.45%

Fixed-Rate of Interest on Home Loans

Home Loan Interest Rate

All Loan Amounts

3-year tenure

For tenures more than three years

10.25%

10.50%

IDBI NEEV

Loan Amount

Rate of Interest

Up to 35 Lakhs

10.25%

Above 35 Lakhs

10.50%

Home Loan Scheme for Rural/Semi-Urban financing

All Loan amounts

10.35%

IDBI Bank Home Loan - Important Points to Note

  • IDBI Bank offers both fixed and floating rate of interest on Home Loans
  • The fixed rates of interest are substantially more than the floating rates
  • There are two fixed rate products, a 3-year tenure and loan tenure for more than three years
  • The rates are reset after three years in the 3-year tenure fixed rate of interest product
  • Borrowers have the option to switch over from a fixed rate structure to a floating rate of interest on the payment of a conversion fee.
  • There is no separate slab for women beneficiaries in the salaried segment
  • Women borrowers under the self-employed category get a concession of 0.05% in the floating rate of interest.
  • IDBI Bank offers RLLR for Home Loans up to 75 Lakhs with effect from September 10, 2019
  • The RLLR rate depends on the credit rating of the borrower. The better the score, the lower is the interest rate.
  • The same interest rates apply to non-resident borrowers, as well

IDBI Bank Home Loan - Method of Calculation of Interest

IDBI Bank calculates Home Loan interest on the daily reducing balance basis. The interest is calculated on the last day of every month. Any unserviced EMI will entail payment of penal charges. As on date, the penal interest is 2% per annum for the overdue amount and the delayed period.

IDBI Bank Home Loan - Conversion from one interest rate type to another

IDBI allows conversion of Home Loans from one interest rate structure to the other subject to the satisfaction of certain conditions and payment of conversion fees. The interest rate conversion structure is as follows:

Interest Rate Conversion Charges

Conversion from a floating rate of interest linked to Base Rate and BPLR to MCLR for Home Loan customers

Outstanding Amount

Conversion Fee

Up to 30 Lakhs

2,500

More than 30 Lakhs and up to 75 Lakhs

5,000

More than 75 Lakhs

10,000

Conversion from a floating rate of interest linked to Base Rate and BPLR to MCLR for customers having Loan Against Property

10,000

Conversion from a fixed rate of interest to floating rate of interest on Home Loans (on expiry of the fixed tenure of 3/10 years)

On the expiry of the mandatory tenure of 3/10 years, no charges are applicable

Home Loan to Home Loan Interest Saver account

0.5% of the outstanding amount

Floating rate Home Loan to a fixed rate of interest Home Loans

IDBI Bank Home Loan - Foreclosure and Part Prepayment

IDBI Bank allows foreclosure and part prepayment in Home Loans subject to specific conditions. Penalties are also applicable as detailed below:

Floating Rate of Interest Home Loans

  • Individual Customers: No prepayment or foreclosure charges are applicable
  • Non Individual Customers:
  • Loans sanctioned on or after January 28, 2015: 2% of the outstanding amount
  • Loans approved before January 28, 2015: Depending on sanction terms listed out in the sanction letter.

Fixed-Rate of Interest Home Loans

The following conditions apply for foreclosure and part prepayment on such loans:

a. If repayment is from own sources

Within six months of the final disbursement

a. Loans sanctioned on or after January 28, 2015: 2% of the outstanding amount.

b. Loans approved before January 28, 2015: Depending on sanction terms.

After six months of the final disbursement - No prepayment or foreclosure charges

b. If there is a balance transfer to another bank

a. Loans sanctioned on or after January 28, 2015: 2% of the outstanding amount.

b. Loans approved before January 28, 2015: Depending on sanction terms.

Conditions for prepayment

  • One prepayment allowed per month
  • The minimum amount of prepayment should be 25,000

IDBI Bank Home Loan Interest - PMAY - Urban Scheme

The rates of interest on the Home Loans sanctioned under the PMAY Scheme are the same as that of other Home Loans. PMAY-U Scheme has an interest subsidy component. Eligible borrowers get an upfront interest subsidy. Therefore, the bank does not charge interest on this amount. The overall EMI burden of the borrower also reduces accordingly.

Category of borrower Family annual income Criteria The maximum loan amount for calculation of subsidy Percentage of subsidy and maximum amount

Economically Weaker Section

Less than 3 Lakhs

6 Lakhs for 20 years

6.5% with a maximum of around 2.67 Lakhs

Low Income Group

More than 3 Lakhs and up to 6 Lakhs

6 Lakhs for 20 years

6.5% with a maximum of 2.67 Lakhs

Middle Income Group-I

Above 6 Lakhs and up to 12 Lakhs

9 Lakhs for 20 years

4% with a maximum of 2.35 Lakhs

Middle Income Group-II

More than 12 Lakhs and up to 18 Lakhs

12 Lakhs for 20 years

3% with a maximum of 2.30 Lakhs

Calculation of PMAY Interest Subsidy

  • PMAY Subsidy calculation is based on the NPV Calculation method
  • NPV is calculated at a discount rate of 9%
  • The PMAY-U website has a PMAY subsidy calculator. Enter the loan amount, the interest rate, and the tenure to get the subsidy amount.

IDBI Bank Home Loan Interest - Frequently Asked Questions

Which of the rates are beneficial, RLLR or MCLR-linked rates?

As on date, the RLLR-linked rate is beneficial to the MCLR because it is less than the MCLR-linked rate for the corresponding amount and tenure. However, the fluctuations in RLLR can be more when compared to MCLR. The banks change their MCLR, usually once in six months, whereas RLLR will change whenever the RBI effects a change in the repo rate.

In IDBI Bank, is a fixed rate of interest on a Home Loan beneficial to a floating rate?

In IDBI Bank, the fixed rate on Home Loans is more than the floating rate by 1.50 points. Considering the present market trends, it will take a long time for the floating rate to match the fixed rate. Therefore, you would end up paying more in a fixed-rate of interest Home Loan.

How does the bank calculate interest on a PMAY loan?

The method of interest calculation on a PMAY loan is the same as that of a regular Home Loan. The only distinguishing factor is that there is a component of upfront interest subsidy. The borrower has to repay the loan amount with interest minus the subsidy. Hence, EMI reduces considerably. The banks calculate interest at the applicable rate on loan, as mentioned in the sanction.

How does the PMAY loan benefit the borrower?

This example will sort out things better. Consider a Home Loan of 6 Lakhs under PMAY and the contracted rate to be 9%. Therefore the EMI works out to 5,398 for a total of 20 years.

The NPV of subsidy available to the borrower is 2.67 Lakhs. Therefore, the effective loan amount reduces to 3.33 Lakhs. Thus, the EMI changes from 5,398 to 2,996. Therefore, the borrower saves an amount of 2,402 per month for 20 years.

However, the bank will calculate interest at 9% on the outstanding amounts. The subsidy is credited upfront to the loan account.

Is the PMAY subsidy available on the entire loan amount?

No, the PMAY subsidy is not available on the entire loan amount. The ceiling for those belonging to EWS and LIG is 6 Lakhs.

The maximum amount of loan allowed for PMAY subsidy for MIG-I and MIG-II loans is 9 Lakhs and 12 Lakhs. Any loan over these amounts does not qualify for a subsidy. Therefore, if you take a loan worth 30 Lakhs in the MIG-II category, the amount over 12 Lakhs (i.e. 18 Lakhs) is an unsubsidised loan.

Can I get IT benefits on loan availed from IDBI Bank?

Yes, you can avail IT concessions on the repayment of interest and the principal amount of Home Loan availed from IDBI bank Ltd.

What will be my EMI if I am a salaried employee, self-employed individual or self-employed professional if I avail a Home Loan of 30 Lakhs from IDBI Bank?

Assume that you opt for 20-year repayment tenure. Your EMI as a salaried person would be 26,225. A self-employed professional will pay 26,320, and a self-employed non-professional will end up paying 26,416 per month. If you have a CIBIL rating of more than 750, your EMI as per the RLLR-linked interest rate will be 25,656.

How do you calculate the EMI?

Visit MyMoneyMantra website and select Financial Tools. Proceed with EMI Calculator option and submit the necessary information to calculate your EMI.

Will my EMI change with a change in the RLLR?

Yes, your EMI will go up or down with every change in the RLLR.

Can a woman take a Home Loan jointly with her spouse and avail the benefit of 0.05% interest concession?

Yes, she can do so provided the property is in her sole name or jointly with her spouse.

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