What is RG 1 2 3 in SBI Home Loan?

Here are a few things that I wish I knew before visiting the bank office to apply for a house loan from the State Bank of India (SBI), the largest bank in the nation. SBI offers a variety of house loans, including the Flexipay home loan, the Privilege home loan, the Shaurya home loan, the Pre-approved home loan, the Realty home loan, and the Bridge home loan, among others, depending on the customer's needs. I knew about all these but I did not what is RG 1 2 3 in SBI home loan.

RG 1 2 3 in SBI home loan meaning

A system for figuring out an asset's risk that has been trademarked is called RiskGrades (RG). RiskGrades is a standardised metric for assessing an asset's volatility across several asset classes. The least risky rating on the scale, zero, is where the scale begins. A market risk score of 1,000 corresponds to the average market risk of a globally diversified market-cap-weighted equity index. RiskGrades evolve over time to reflect both increases in market-wide systematic risk as well as changes in an investment's unsystematic risk. Based on a variance-covariance methodology, RiskGrades calculates the scaled standard deviations of the returns to represent the volatility of an asset or asset portfolio.

RG-1 2 3 in SBI home loan meaning

The bank uses its own method to assess the borrower's risk profile for loans over Rs 30 lakh. The groups are divided into RG 1, 2, 3, 4, and 6. While the interest rate is lower for individuals falling into RG 1, 2, and 3 than RG 4,5 and 6, respectively. 

TERM LOANS ABOVE ₹ 75 lacs- FLOATING RATE

MCLR

Since the house loans are correlated with the bank's MCLR, start with that figure. SBI's home loan interest rate is correlated with its 12-month MCLR in this scenario. Therefore, the reset duration is 12 months, meaning the EMI will be fixed for 12 months before changing in accordance with the current MCLR. The SBI MCLR is 8.55 per cent at the moment.

ER

The utilisation rate that a borrower actually pays on a loan is known as the effective interest rate. It may alternatively be regarded as the yield to maturity or the market rate of interest.

BPS

Basis points (BPS), such as 1% change equals a change of 100 basis points and 0.01% change equals one basis point, are used to represent changes in the value or rate of financial instruments. In finance, a basis point serves as a common unit of measurement for interest rates and other percentages. A basis point is one-hundredth of one per cent, or 0.01%. (and .0001 in decimal form).

I hope this helps you comprehend what is RG 1 2 3 in SBI home loan.