Should we get a loan from a private or public sector bank in India? Is there a gap in interest rates between borrowing from a public sector bank and a private bank? The younger generation likes private banks, although our parents always advised us to use a public sector bank.
High EMIs for home loan borrowers to continue as RBI holds repo rate; no respite from high home loan interest rates
However, if you want a cheaper loan and are willing to do some legwork, as well as have a lot of patience, you could benefit financially if you contact a public sector bank or a government bank for a loan in India.
Here is a quick comparison of public vs private bank interest rates offered in November. However, the rates may vary depending on the Cibil score, profession among other things. (Do keep in mind that the interest rate of a home loan, should only be one of factors to consider when selecting a lender.)
| Name of Lender | Loan Amount (Rs) | ||
| Upto 30 Lakh | Above 30 Lakh & Upto 75 Lakh | Above 75 Lakh | |
| PUBLIC SECTOR BANKS | |||
| State Bank of India | 8.40-10.15 | 8.40-10.05 | 8.40-10.05 |
| Bank of Baroda | 8.40-10.65 | 8.40-10.65 | 8.40-10.90 |
| Union Bank of India | 8.40-10.80 | 8.40-10.95 | 8.40-10.95 |
| Punjab National Bank | 8.45-10.25 | 8.40-10.15 | 8.40-10.15 |
| Bank of India | 8.30-10.75 | 8.30-10.75 | 8.30-10.75 |
| *Canara Bank | 8.50-11.25 | 8.45-11.25 | 8.40-11.15 |
| UCO Bank | 8.45-10.30 | 8.45-10.30 | 8.45-10.30 |
| Bank of Maharashtra | 8.50-11.15 | 8.50-11.15 | 8.50-11.15 |
| Punjab and Sind Bank | 8.50-10.00 | 8.50-10.00 | 8.50-10.00 |
| Indian Overseas Bank | 8.40 onwards | 8.40 onwards | 8.40 onwards |
| Central Bank of India | 8.45-9.80 | 8.45-9.80 | 8.45-9.80 |
Private Bank
| Name of Lender | Upto 30 Lakh | Above 30 Lakh & Upto 75 Lakh | Above 75 Lakh |
| Kotak Mahindra Bank | 8.70 onwards | 8.70 onwards | 8.70 onwards |
| ICICI Bank | 9.00-9.80 | 9.00-9.95 | 9.00-10.05 |
| Axis Bank | 8.70-13.30 | 8.70-13.30 | 8.70-9.10 |
| HSBC Bank | 8.45 onwards | 8.45 onwards | 8.45 onwards |
| South Indian Bank | 9.57-10.97 | 9.57-10.77 | 9.57-11.42 |
| Karur Vysya Bank | 9.23-10.73 | 9.23-10.73 | 9.23-10.73 |
| Karnataka Bank | 8.75-10.43 | 8.75-10.43 | 8.75-10.43 |
| Federal Bank | 8.80 onwards | 8.80 onwards | 8.80 onwards |
| Dhanlaxmi Bank | 9.35-10.50 | 9.35-10.50 | 9.35-10.50 |
| Tamilnad Mercantile Bank | 9.45-9.95 | 9.45-9.95 | 9.45-9.95 |
| Bandhan Bank | 9.15-15.00 | 9.15-13.32 | 9.15-13.32 |
| RBL Bank | 9.15-11.55 | 9.10-11.30 | 9.10-11.30 |
| CSB Bank | 11.27-13.12 | 11.27-13.12 | 11.27-13.12 |
| HDFC Bank Ltd. | 8.35 onwards | 8.35 onwards | 8.35 onwards |
| City Union Bank | 12.25 – 14.00 | 12.75 – 14.50 | 13.25 – 14.75 |
*List is sourced from Paisabazaar as on November 8, 2023
When selecting a lender for a home loan, consider the following:
- Bank processing fees
- CIBIL score
- Profession
- Paperwork, efficiency and turnaround time
- Interest rate fluctuation
- Prepayment charges
- Prepayment period
- Pre-payment penalty amount
- Charges for dealing in branch office
Availing home loan in the public and private sectors each have advantages and disadvantages. It depends on your priority and preference.
