Within days of government promising more funds to PSU banks, two leading state-owned lenders PNB and Oriental Bank of Commerce (OBC) Tuesday cut interest rate on auto and consumer durable loans by up to 2.50 percent to cash in on festive demand.
New Delhi: Within days of government promising more funds to PSU banks, state-run lenders PNB and OBC Tuesday cut lending rate on auto and consumer durable loans by up to 2.50 percent to cash in on the festive demand, while SBI said it is looking at reducing rates on credit for the segments.
Rate of interest on car loans has been reduced by over a percent to 10.65 percent on fixed basis, PNB said in a statement.
Similarly for two-wheeler, the interest rate has been slashed to 12.25 percent while rate of interest on personal loans for purchase of consumer durables has been brought down to 12.75 percent on fixed basis.
These rates are lesser by 1 percent to 2.50 percent from the existing floating rates, it said.
Ruling out any lowering of interest rates on home loan front, SBI Managing Director in-charge of national banking A Krishna Kumar said, "Home loans are practically the lowest priced, and so there is no scope for reduction there, but we are looking at other products like car loans (where rates will be cut)."
According to OBC, interest rate on commercial financing of four wheelers (Auto & Taxis) has been reduced to 12 percent from 12.25 percent.
Similarly, personal loans and consumer durable loans has been reduced by 0.25 percent to 12.50 percent for government employees while for other employees it has been brought down to 13.50 percent.
The new rates would be effective from October 10, OBC said in a statement.
Punjab National Bank said that there will be full waiver of upfront fee and documentation charges. In case of car loan, the bank will finance to the extent of 100 percent of ex-showroom price of car.
The festival offer is valid up to January 31, it said.
IDBI Bank said that it will offer home and auto loans to new borrowers at base rate with effect from tomorrow.
"As a festive season offer, we have decided to offer home and auto loans at base rate, which is currently 10.25 percent," the state-run lender said in a release.
The bank has also decided to waive processing fees for both the loans during the period.
On home loan, PNB said the bank has waived of upfront fee and documentation charges. However, the interest rates on home loan have been left unchanged.
Loan up to Rs 5 lakh for purchase of consumer durables and furnishing of the existing fully constructed house at fixed rate of interest of 10.50 percent, it added.
Last week, the government had decided to provide additional funds to the PSU banks to enable them extend more credit to auto and consumer durables sectors to stimulate demand and combat slowdown.
"I think what they are looking at is ensuring that people, specially during the festive season, are able to access loans for purchase of consumer goods and consumer durables to the extent that it is feasible," SBI new chairperson Arundhati Bhattacharya said.
The decision to increase the quantum of capital infusion was taken at a meeting between Finance Minister P Chidambaram, RBI Governor Raghuram Rajan and Economic Affairs Secretary Arvind Mayaram.
"This amount (Rs 14,000 crore provided for capital infusion in Budget) will be enhanced sufficiently. The additional amount of capital will be provided to banks to enable them to lend to borrowers in selected sectors such as two-wheeler, consumer durables, etc at lower rates in order to stimulate demand," a finance ministry statement had said.
The additional fund infusion would help in combating slowdown and boost output, it had added.