Several state-owned banks are waiving processing fees on home loans to attract more customers during the festive season. Banks like Central Bank of India, Canara Bank, Indian Overseas Bank, Bank of Baroda, and Punjab National Bank have completely removed these fees from December 2024 to March 2025.
Indian Overseas Bank has already seen a 19% increase in home loan disbursals, reaching ₹1,849.67 crore in the second quarter of this financial year after announcing the fee waiver. Ajay Srivastava, the bank’s managing director and CEO, noted that buying a new house is considered especially lucky during the festive season, making this fee waiver an appealing offer for attracting new and existing customers.
In contrast, private banks have not announced any similar fee waivers. Public sector banks generally provide better home loan rates, making them more appealing to borrowers. For example, the lowest rate for a loan up to ₹30 lakh from private banks is 8.70%, while state-run banks offer similar loans at 8.35% for up to 30 years.
Anil Gupta, a vice president at ICRA, explained that private banks typically don’t waive processing charges because they incur costs in their loan approval processes. Since public sector banks have competitive lending rates and are looking to increase business during the festive season, they have chosen to waive these charges.
The Reserve Bank of India reports that credit for home loans has risen by ₹10 lakh crore since 2022, fueled by a surge in demand for homes following the Covid-19 pandemic. As of August, bank credit for home loans stood at ₹28.33 lakh crore, a significant increase from ₹18.35 lakh crore two years ago.
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