Latest personal finance news and trends in India
The State Bank of India has cut its base rate, the minimum interest rate at which it lends, by 25 basis points to 9.75 percent with effect from Thursday, it said in a statement late on Tuesday. Read more here.
September 12, 2009. Punjab National Bank, a public sector bank in India, has announced a festival bonanza offer reducing housing and car loan interest rates until October 31, 2009.
Under this scheme, home loans upto Rs. 30 lacs will be offered a fixed interest rate of 8.50% for the first 3 years of the loan repayment period. Full waiver of documentation and processing fees also come with this scheme.
Margin for housing loans upto Rs. 20 lacs stands reduced to 15%. This means that you can get a loan for upto 85% of the cost of the house you would like to purchase as appraised by PNB.
PNB is also offering a reduction of 0.50% for car loans under fixed rate option.
August 19, 2009. Chairman of the State Bank of India, O. P. Bhatt, indicated that home loan and auto loan seekers can expect a cut in interest rates in the next three to six months. This is according to an article in The Hindu.
According to Mr. Bhatt, rates may remain stable and even decline further in the three to six month period given the positive signs in the Indian economy. He did not project rates beyond six months given that economic conditions are dynamic and it’s difficult to predict interest rates on a longer term basis.
SBI has cut rates and offered incentives to new home loan and auto loan borrowers in the past few months to boost the retail borrowing segment.
December 06, 2008, Ratekhoj.com. Measures taken by the Reserve Bank of India to boost economic growth are likely to result in home loans, car loans, personal loans and other loans becoming cheaper. As announced in a press release by the RBI:
The Reserve Bank has reviewed the evolving macroeconomic and monetary/liquidity conditions and has decided to take the following further measures:
- It has been decided to reduce the repo rate under the LAF by 100 basis points from 7.5 per cent to 6.5 per cent and the reverse repo rate by 100 basis points from 6.0 per cent to 5.0 per cent, effective December 8, 2008.
- We are working on a similar refinance facility for the National Housing Bank (NHB) of an amount of Rs 4, 000 crore. We will announce the details after consideration of the proposal by the Central Board of the Reserve Bank which is meeting next week.
- It has been decided that loans granted by banks to Housing Finance Companies (HFCs) for on-lending to individuals for purchase/construction of dwelling units may be classified under priority sector, provided the housing loans granted by HFCs do not exceed Rs.20 lakh per dwelling unit per family. However, the eligibility under this measure will be restricted to five per cent of the individual bank’s total priority sector lending. This special dispensation will apply to loans granted by banks to HFCs up to March 31, 2010.
Repo rate is the rate at which banks borrow money from RBI and the reverse repo rate is the rate at which banks park their short-term excess liquidity with the RBI. A reduction in the repo rate as announced by RBI above will help banks to get money at a cheaper rate. It is expected that this will be passed on to consumers in the form of cheaper housing, car and other loans to stimulate economic growth. As reported in The Hindu, the RBI Governor D Subbaro expects cuts in both lending as well as fixed deposit rates:
Giving a clear signal to banks to cut the interest rates, the Reserve Bank of India on Saturday reduced the short-term indicative rates — the repo rate and the reverse report rate by 100 basis points each to 6.5 per cent and 5 per cent — with effect from December 8.
This is likely to result in a further cut in interest rates of housing loans and other consumer and personal loans by banks.
“The cumulative impact of the measures in Saturday’s package, together with earlier measures, should be to step up demand and arrest the growth moderation. In particular, the reduction in the repo and reverse repo rates should result in a reduction in the marginal cost of funds to banks and enable them to improve the flow of credit to productive sectors of the economy on viable terms,” RBI Governor D. Subbarao said here while announcing a slew of measures to stimulate the economy.
“Our expectation is that banks will respond to the measures today by lowering lending and deposit rates,” the RBI Governor added.
Earlier, the RBI signalled a lowering of the interest rate structure by reducing its key policy repo rate by 150 basis points from 9 per cent as on October 19 to 7.5 per cent on November 3.
Taking the signal from the repo rate cut, the top five public sector banks have reduced their benchmark prime lending rates (BPLR) from 13.75–14 per cent as on October 1 to 13– 13.50 per cent now.
The central bank expects more banks to reduce rates following the latest measures.
As reported in Indian Express:
The Reserve Bank of India (RBI) sent a strong signal to banks to lower interest rates on all types of borrowings by cutting the repo and reserve repo rates by 100 basis points. The cuts are part of a mega economic stimulus package to make borrowing more affordable.
In another measure that will result in lower home loans, the RBI has decided that loans granted by banks to housing finance companies (HFCs) for on-lending to individuals may be classified under the priority sector, provided the loans granted by HFCs do not exceed Rs 20 lakh per dwelling unit per family. The priority sector status will enable banks to reduce interest rates on such loans significantly.
The RBI had cut the repo rate from 9 per cent to 7.5 per cent in October-November as a signal to commercial banks to bring down rates, but not many private banks did that. This time, RBI Governor D. Subbarao, while announcing the cut in rates in Mumbai on Saturday, said in no uncertain terms that commercial banks “need to get the signal”.
“We hope that commercial banks (will) act accordingly. It is a matter of time before banks take a decision on interest rates on home loans. Monetary transmission takes time. However, as there is adequate liquidity in the system now and the demand for money is also falling, interest rates will also move down,” Subbarao said.
On Friday, ICICI Bank reduced its interest rate for home loans of Rs 20 lakh and below by 1.50 per cent to 11.50 per cent. Bankers said that with a comfortable liquidity position and fall in inflation, interest rates would now fall across the board.
As reported in Business Standard:
Housing finance companies (HFCs) are contemplating a cut in their prime lending rates (PLRs) following the latest measures of the Reserve Bank of India (RBI) to stimulate the economy.
“Naturally, we would reduce our prime lending rates as we are expecting an instant fund flow at a cheaper rate, subsequent to the policy, which would lower our cost of funds,” said LIC Housing Finance Director and CEO R R Nair.
It’s likely that there will be cuts in home loan and other loan rates in the near term in response to RBI’s measures. Therefore, people contemplating a home purchase in the near future can expect benefits from these measures.
November 12, 2008, Ratekhoj.com. State Bank of India, India’s largest public sector bank, has cut interest rates on car loans by 75 bps or 0.75% effective from November 10, 2008. This cut in car loan rates applies to both new as well as used vehicles. Car loans are offered only in the floating rate category by State Bank of India.
Interest rates on loans for purchase of new cars with a loan period of less than 3 years and a loan amount of Rs. 7.5 lacs & above is now 11.75%. Interest rate for purchase of new cars with a loan period of less than 3 years and a loan amount of less than Rs. 7.5 lacs is 12.00%.
For loan period of 3 to 5 years, the interest rate is 12.00% for all loan amounts for new cars. The interest rate is 12.25% for a loan period of 5 to 7 years for new cars and all loan amounts. State Bank of India does not offer car loans for a loan period of more than 7 years.
For used cars, State Bank of India is offering an interest rate of 15.50% for loan period of upto 3 years and 15.75% for loan period of above 3 years and upto 7 years. These rates apply to all car loan amounts.
This cut in car loan rate is based on a cut in State Bank of India’s Bank Prime Lending Rate (BPLR) announced earlier. State Bank of India has also announed a cut in its fixed deposit interest rates effective from December 1, 2008.
November 6, 2008, Ratekhoj.com. United Bank of India, a public sector bank in India, has announced in a press release that it has decided to pass on the benefits of 25 bps (0.25%) cut in lending rate to all advances linked with PLR with effect from 3rd November, 2008. This will be applicable to Education loans, Housing Loans, Car Loans, SMEs and all other loans.
The reduced lending rate will be applicable for existing Loan Accounts also.
The bank also announded that further cut in the rate of interest on advances will be considered commensurate with decrease in the rate of deposits in the next week.
Bank of Baroda in a press release has announced a reduction in its Bank Prime Lending Rate (BPLR) that impacts loan rates that are based on the BPLR. According to the press release, in response to the Reserve Bank of India’s recent expansionary measures to spur the sagging economic activity, Bank of Baroda has decided to reduce its Benchmark Prime Lending Rate (BPLR) by 75 bps to 13.25% (from 14.00%) effective November 10, 2008.
The press release states that the reduction in the BPLR is triggered by the 350 bps reduction in the CRR to 5.5% and 150 bps reduction in the Repo Rate to 7.5%. It states that the 75 bps cut in the BPLR will benefit the Bank’s borrowers to a great extent.
The reduction will be applicable to the existing as well as new loans.
The bank states that the rates of interest on car loans stands reduced from 12.00% to 11.25%. The floating home loans will now become much cheaper and the interest rate in the segment for loans up to Rs 30 lacs now stands at 9.25% for loans repayable within 5 years, 9.50% for loans repayable within 5 to 15 years and 9.75% for loans repayable within 15 to 25 years.
November 5, 2008, Ratekhoj.com. Bank of India, a nationalized bank in India has announced on its website a reduction in its Bank Prime Lending Rate (BPLR) by 75 bps (or 0.75%) effective from November 6, 2008. This will reduce interest rates for loans that are linked to the BPLR such as the floating rate home and car loans. Bank of India has also announced that fixed deposit rates are likely to be reduced from December 1, 2008 and that customers can take advantage of the higher deposit interest rates before then.
November 5, 2008, Ratekhoj.com. Allahabad Bank , a nationalized bank in India, has announced in a press release that it has decided to cut its Benchmark Prime Lending Rate ( BPLR) by 75 basis points from the present rate of 14% to 13.25% with effect from 10th November, 2008. The reduction in BPLR has been announced having regard to the recent CRR & Repo-Rate cut by the Reserve Bank of India , current market scenario and the need to provide needbased credit to productive sectors at affordable rates.
The cut in the BPLR is expected to have a beneficial impact for borrowers interested in home, auto or other loans by reducing the corresponding loan interest rates. The cut in BPLR by Allahabad Bank is inline with similar reductions in BPLR by many other banks including Bank of India, Bank of Baroda and Canara Bank.
Oct 17, 2008, Ratekhoj.com. Punjab National Bank, a public sector bank, has announced a reduction in its home and car loan interest rates effective October 16, 2008 for the festival season. The reduction is by 0.50% for both existing and new loans in both floating and fixed rate home loans as well as car loans. According to the press release, this reduction in home loan rates has been made possible on account of reduction of Cash Reserve Ratio by RBI and is designed to ensure credit to customers during the festival season. If you are looking for home loans, you can get the best home loan rates in India by comparing home loan rates across all major banks in India.
Punjab National Bank has also announced a increase in fixed deposit rates effective October 15, 2008. It now offers a peak fixed deposit rate of 10.50% for non-senior citizens (11.00% for seniors) for a term of 1-2 years.