Home Loan from Public Sector Banks

Check details about home loan from public sector banks

✓ Home Loan from ₹2 Lakhs To ₹15 Cr ✓ Multiple Lending Partners ✓ Interest Rates Starting @ 8.25%

What are Public Sector Banks

A Public Sector Bank is a bank in which the government of India holds a majority of stake. More specifically, the Ministry of Finance is a major shareholder in public sector banks. Much like most of the banks, several public sector banks will also offer you a home loan. On that note, if you want to get a home loan from a banking institution, you can either get it from a private sector bank or a public sector bank. Both these categories of banks have their own unique set of features as well as pros and cons that you should know of. For example, a private sector bank has a faster turnaround time whereas a public sector bank will provide you a home loan at a better interest rate than the private players.

Why Choose a Public Sector Bank for a Home Loan

Some of the reasons why you must consider taking a housing loan from a public sector bank are:

  • The processing fees that they charge you is much lower than what you have to pay a private sector bank.

  • If the Reserve Bank of India (RBI) decreases their repo rate, a public sector bank will decrease the interest rate applicable to you immediately. A private sector bank, on the other hand, may not reduce your interest rate at all in the light of such an event.

  • If you want to prepay your loan ahead of time, a public sector bank will allow you to do so at no additional charge. If you are dealing with a private sector bank, you may have to pay up to 2% of the amount that you are prepaying.

  • You can prepay your loan at any given point in time during your loan repayment tenure. Private sector banks, on the other hand, will only allow you to do the same after a minimum of six instalments.

  • If you want to prepay a home loan that you have taken from a public sector bank, you can do so in its entirety at any given point in time. On the other hand, a private sector bank may only allow you to prepay up to 25% of your outstanding housing loan balance in a given year.

  • A public sector bank generally has a diverse range of home loan schemes and each of them is either meant for a specific income group or has a different use case. You will typically not find as much variety if you choose to deal with a private sector bank.

  • The home loan eligibility criteria laid out by a public sector bank is generally more lenient in comparison to that of a private sector bank. Hence, you will always stand a better chance of getting a home loan from a public sector bank than a private one.

Top Public Sector Banks for Home Loan

The starting interest rates at which some of the top Indian public sector lending institutions are willing to give you a home loan are as follows:

Bank Name


Year of Establishment

State Bank of India

Mumbai, Maharashtra


UCO Bank

Kolkata, West Bengal


Indian Overseas Bank

Chennai, Tamil Nadu


Bank of Maharashtra

Pune, Maharashtra


Union Bank of India

Mumbai, Maharashtra


Central Bank of India

Mumbai, Maharashtra


Bank of Baroda

Vadodara, Gujarat


Punjab and Sind Bank

New Delhi, Delhi


Indian Bank

Chennai, Tamil Nadu


Bank of India

Mumbai, Maharashtra


Canara Bank

Bengaluru, Karnataka


Punjab National Bank

New Delhi, Delhi


Private Banks vs Public Banks for Home Loan

Before deciding whether you should take a home loan from a public sector bank or a private one, it is important for you to know how one is different from the other. The key distinctions between the two are as follows:


Public Sector Bank

Private Sector Bank

Processing Fees

Lower than their private sector counterparts as public sector banks do not hire direct selling agents (DSAs).

A private sector bank generally charges a higher amount as processing fees since it hires DSAs to get them leads/business.

Loan To Value (LTV) Ratio

You can acquire as much as up to 90% of the property value as a housing loan from a public sector bank.

In some cases, you can acquire all of the money you will need to buy a property as a home loan from a private bank.

Processing/Turnaround time

Public sector banks will take more time than their counterparts in their private sector to process your home loan application and then disperse it.

Private sector banks will be relatively quicker in comparison to their public sector counterparts in the area of processing your loan documents and then crediting the amount in your bank.

Provision of doorstep delivery services

Public sector banks do not offer doorstep delivery service.

Private sector banks offer doorstep delivery service to their home loan customers.

Interest rates

Public sector banks will charge you a relatively lower interest rate on a housing loan as compared to a private sector lender.

Given that private sector banks are more about profitability than the public sector players and get a lot of intermediaries involved, the interest rate that they will charge you will be higher than that of a public bank.

Loan repayment penalty

Public sector banks will not charge you a single extra rupee as a penalty for repaying your loan before the end of your loan repayment tenure.

A private sector bank will charge you up to 2% of the home loan amount you want to repay to make up for the losses in interest.


If you choose to take a loan from a public sector bank, you will be able to enjoy benefits such as lower interest rates and no processing fees. Additionally, you will also get to prepay your loan in its entirety and that too whenever you want to if you have a public sector bank as your home loan lender. But, there are some positives attached to taking a home loan from a private sector bank too. It ultimately comes down to what you want from a home loan lender and it is on that very basis you should take a call. You can always apply for a home loan through Bajaj MARKETS and make use of benefits such as competitive interest rates, flexible loan repayment tenures and balance transfer facilities.