A day after the Reserve Bank of India (RBI) lowered the key policy rate and cut cash reserve ratio by 25 bps each, banks took the cue and lowered lending rates.
State Bank of India (SBI), India's largest lender, reduced its base rate (the benchmark to which all loan rates are linked) by five basis points to 9.7 per cent, effective Monday. Now, the interest on an SBI home loan of up to Rs 30 lakh is 9.95 per cent; for loans of more than Rs 30 lakh, the interest would be 10.10 per cent. The bank also lowered the benchmark prime lending rate by five basis points to 14.45 per cent. All SBI car loans would have an interest of 10.45 per cent.
HDFC Bank has reduced its retail lending rate by 25-50 basis points. According to a bank official, interest rates on car loans and commercial vehicles are now cheaper by 25 basis points, while interest on two-wheeler loans has been reduced by 50 basis points. For car loans, the bank would charge interest of 10.5-11.5 per cent, while interest on loans for heavy commercial vehicles would be 11 per cent. For light commercial vehicle loans, borrowers would have to pay interest of 13.75 per cent. Those taking loans for two-wheelers would have to pay 19.25-22.25 per cent interest, said the bank official.
However, HDFC Bank has left its base rate untouched at 9.7 per cent. Since most of HDFC Bank's retail loans are fixed-rate ones, existing borrowers wouldn't benefit from the rate cut.
Federal Bank has cut the interest on car loans to 10.45 per cent. Earlier, it charged interest of 11.2-11.7 per cent, depending on the tenure. It has also set up a National Auto Loan Hub, which would ensure speedy processing and turn-around time of less than 24 hours, said a press release issued by the bank. The hub would function as a single window for processing and sanctioning automobile loans.
Union Bank of India has extended its festive offer till March 31. It would offer home loans of up to Rs 75 lakh at the base rate of 10.5 per cent. Earlier, it offered home loans of up to Rs 30 lakh at the base rate.
A few public sector lenders are also expected to decide on interest rates in the next few days. According to a Central Bank of India official, the bank's asset liability committee would meet tomorrow to decide on the base rate. Yesterday, IDBI Bank had reduced its base rate to 10.25 per cent.