The largest lender State Bank of India will be seeking clarifications from the Reserve Bank whether it can offer long-term home loans with fixed rates in the beginning and convert the same into floating rates later, chairman Rajnish Kumar has said.

The move comes after the Reserve Bank has mandated banks to shift all retail lending to floating rates that will be determined by external benchmarks like the repo rate.

Kumar said there is a lack of clarity on how it can go ahead with the fixed rate products, after the RBI’s new regulations on floating rates.

Hinting at the volatility in the repo rate, he said some home buyers may want their loan rates to be fixed.

Speaking to reporters here over the weekend, Kumar said the central bank’s recent guidelines on floating rate products for the retail segment has necessitated the need for the clarity.

Kumar has clarified that from an asset liability management perspective, it is difficult to have a fixed rate product for a long term like 30 years, the maximum tenor of a home loan now from the bank now. Some private sector peers offer up to 35 years of home loans depending on in the age of the borrower, though.

At present, SBI has a floating rate home loan product linked to its marginal cost of funds-based lending rate and it recently withdrew one linked to the repo rate. It does not have a fixed rate home loan product at present.

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