Mumbai: The car finance market is hotting up with ICICI Bank and Axis Bank slashing interest on new car loans.
While ICICI Bank has cut its car loan rates by 0.25-0.5 percent, Axis Bank on Thursday announced a reduction of 0.5-0.75 percent for loans having three-five years maturity for new customers.
"ICICI Bank has cut its car loan rates by 0.25-0.5 percent to 9.5-11.5 percent, depending on the category and tenure of loans," a source close to the development said here.
When contacted, an ICICI Bank spokesperson tersely said: "Our auto loan rates are in line with competition."
The largest private lender had revised its rates downwards last October as part of the festive offer.
It can be noted that ICICI has been going slow on the entire lending business especially the auto loans since 2008 following its lending spree from 2005 through 2007. Also, ICICI was the only major domestic bank which was adversely impacted by the global credit crisis.
The largest private sector bank had even discontinued two-wheeler loans last year.
The reduction in car loan rates by biggies like ICICI Bank and Axis are likely to put pressure on other banks to follow suit.
"Based on customer research and interactions as well as market feedback we feel that this is the appropriate time to offer new rates to new customers," Axis Bank president for retail banking Manju Srivatsa said here today.
Axis Bank recently introduced a new scheme under the Axis Advantage ? an exclusive forum for select dealers, wherein the bank would run exclusive schemes and introduce attractive incentives for these dealers.
The domestic auto market is set further accelerated growth with increasing competition in the small car segment. As many as half a dozen global companies will be entering the small car space shortly.
Most car companies saw robust sales last month, with market leader Maruti Suzuki posting 36 per cent growth while rival Hyundai?s sales grew 43 per cent and Mahindra 120 per cent on the back of economic revival.
Bankers are waiting for further cues from the Reserve Bank which is set to announce the quarterly review of its annual monetary policy on January 29, prior to deciding any change in their rate structure.
PTI
First Published: Thursday, January 07, 2010, 22:34