India’s largest private sector lender ICICI Bank , on Thursday, slashed its home loan rates by up to 100 basis points (across tenures) in an attempt to woo retail borrowers ahead of the upcoming festive season.
With this latest revision of rate, the lender is offering floating rate home loan at 10.25% p.a. for an amount below Rs 30 lakh, a reduction of 25 basis points. For home loans between Rs 30 lakh and 3 crore, the new rate of interest is 10.50% as against 11-11.50% earlier.
“The same rate of interest is applicable for fixed rate home loans for the one and two years fixed tenures. For a fixed rate loan of three years tenure, the offering is at 10.50 % for loans below Rs 30 lakhs and 10.75% for the loans above Rs 30 lakhs and upto Rs. 3 crores,” ICICI Bank said in a statement.
This special festival over is valid for sanctions till December 31, 2012.
Moreover, the bank merged two different slabs of home loans into one. The borader slab of Rs 30 lakh & 3 crore was earlier in the form of two slabs: Rs 30-75 lakh and above Rs 75 lakh.
The bank however did not announce any decrease in auto loan rates in the press statement. Moneycontrol.com has learnt that the lender did not reduce auto loan rates in October but may have already cut such rate in early September.
Meanwhile, Syndicate Bank, a Bangalore based state-owned bank also came up with a special festive offer on home loans at 10.50% up to Rs 25 lakh and at 10.75% for above Rs 25 lakh but up to Rs 75 lakh. For loans over Rs 75 lakh, the rate of interest charged is 10.90%.
India’s largest lender the State Bank of India already lessened its base rate, the benchmark lending rate below which a bank is not mandated to lend by 25 bps to 9.75%, a day after RBI’s mid quarter credit policy announcement on September. Prior to this, the lender had reduced the interest rates on home and auto loans by 50 bps.
SBI’s move has actually sparked off competion among other lenders, especially its peers like ICICI Bank, Punjab National Bank and others. The second largest private sector lender HDFC Bank too hinted about cutting interest rates.
Moreover, RBI’s repeated reminders to pass on the benefits of the central bank’s policy actions have actually nudged the bankers to reduce rates. Recently, RBI governor D Subbarao expressed hope that banks would lower their lending rate in response to the 25 bps reduction in the CRR– the percentage of deposits banks are mandated to keep with the central bank.
“RBI will never ask us directly to cut rates. Banks need to read the cue. We are seriously considering a rate cut as we understand RBI’s wish. However, we may first reduce deposit rates and then lending rates,” an executive director of a large public sector bank told moneycontrol.com
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