ABN Amro Bank on Monday announced its foray into the housing loan segment with the lowest interest rate of 6.0 per cent in the first year and 6.5 per cent in the second year under its 'Super Saver Loan Package', targeting at least 10 per cent of the Rs 50,000 crore (Rs 500 billion) home loan segment.

From the third year, the foreign bank will offer loans at the prevailing floating rate for all loans between Rs 100,000 to Rs 1 crore (Rs 10 million), Romesh Sobti, executive vice president, ABN Amro Bank, said after launching the scheme in New Delhi.

The equated monthly installments (EMI) come to as low as Rs 717 per lakh for a 20-year loan.

Coinciding with the festive seasons of Diwali and Christmas, ABN Amro Bank's promotional 'Super Saver Loan Package' would be offered till December 31 this year.

The scheme has been launched in New Delhi and might be extended to other centres soon.

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The foreign bank's move to enter the housing loan segment with such low rates is expected to trigger another rate war among banks and housing finance companies.

Banks like United Bank of India, Vijaya Bank and Corporation Bank offer home loans at 7.25-7.50 per cent, while bigger banks like SBI, ICICI Bank, PNB and Bank of Baroda pegs it at 7.75 per cent onwards.

"We are targeting our existing clients and consumers in nine major cities. We will extend it to 25-30 cities in 2-3 years," Sobti said.

Apart from the promotional scheme, Sobti said the bank would offer housing loans at a floating rate of 7.75 per cent and a fixed rate of 8.25 per cent.

The bank will reprice its floating loans every six months, while fixed rates would be revised every three years.

The bank has tied up with ICICI Lombard General Insurance to provide property insurance to home loan clients.

ABN Amro Bank's head of consumer banking Nitin Chopra said the bank was targeting more than 10 per cent of the housing loan segment in the next 2-3 years.

"We want to be amongst the top five players with over 10 per cent market share," he said.

The home loan segment is now at Rs 50,000 crore and growing by over 30 per cent.

Branded as 'All Smiles Home Loans', the ABN Amro Bank scheme also offers a host of value-added services like SMS alert to help customers keep track of their loan sanctions and disbursements status.

The bank would also offer its Smart Gold credit card to the borrowers free of joining fees and concessional rates on personal loans and auto loans.

ABN Amro also offers a refinance facility, which would enable the bank to take over the entire loan outstanding that a customer has with another bank or housing finance provider.

The bank also provides a privileges booklet which would provide significant savings on purchase of furniture, furnishing, bathroom accessories, lights and house keeping services, kitchenwares and tiles.