SBI Doubles Minimum Income Requirement for Car Loans

Bangalore: SBI (State Bank of India) has nearly doubled the minimum income requirements to acquire a car loan. Now it will provide car loans for those whose minimum earnings is Rs.2.5 lakh per year or Rs.21,000 a month, which was Rs.1 lakh per year or Rs.8,300 per month previously.

SBI feels that the new annual income limit of Rs.2.5 lakh will be safe enough for both the bank as well as the borrowers. The maximum amount of loan the bank will provide will be 48 times of the net monthly salary of the borrower.

This aggressive plan of the country’s biggest bank will push a seven-year car loan product for a monthly installments (EMI) of Rs.1,765 per lakh. Less interested loaners will now be more detached from loans due to such rash decision of SBI. The bank is well aware that this scheme will not be able to attract the borrowers who are already not able to afford a car. It has also increased the interest rates on Car Loans by 75 basis points to 12 percent recently.

SBI’s loans have risen to Rs.33,946 crore at the end of September 2011 which was Rs.23,205 crore a year ago and the total non-performing assets in the personal retail segment stood at Rs.4,870 crore consisting of around 1.5 percent of non- performing assets from auto sector.