Mumbai, March 9: Finance Minister P Chidambaram's pitch for a differential and lower rates for home loans below Rs 20 lakh has found few takers among public sector banks. Bankers, which recently carried out a round of reduction in their benchmark prime lending rates, feel that rates are already low and there was no need to for lowering it further for sub-Rs 20 lakh home loans. The Finance Minister, speaking at an industry association function earlier last week in New Delhi, had said that home loan borrowers of less than Rs 20 lakh should be incentivised by offering lower interest rates. Barring Kolkata-based Uco Bank, which was looking at a further 0.5 per cent cut in interest rates, none of the big public sector banks expressed their intent on a cut.

"We were the first bank to pass on the benefit of lower interest rates to customers of sub-Rs 20 lakh when Reserve Bank reduced risk provisioning for this category," Union Bank of India Chairman & Managing Director M V Nair told PTI. "The bank has maintained a continued interest rate differential for home loans in this category.

We are not looking at cutting the rates further," he said. Union Bank has about 85 per cent of its loans in this category with the size of portfolio around Rs 7,000 crore. Similarly, Punjab National Bank Chairman K C Chakraborty said the bank was not looking at reducing rates further as it was already offering the lowest rates among peers. "We are already offering the lowest interest rates. Other banks have to first come to our levels," Chakraborty said.