Invest In India

Cheaper loan rates to woo customers this festive seasons

August 28th, 2010

Malvika

PSUs are planning to attract customers by offering them loans at a cheaper interest rate.

In order to increase the customer in their loan registers banks are planning to woo individuals with cheaper loans even as interest rates are on the rise.

Considering Ganesh Chaturti and Diwali round the corner public sector banks are trying to instill the festive spirit and drive people to take loans.

Consumer loans could be now available even at 150 basis points less than they were for the next few months as banks unveil special offers.

KR Kamath, CMD, PNB, “We are planning to lend at lower rates to small borrowers. Car loans will be cheaper by 50 basis points and will be available at 10%, while home loans for up to Rs 50 lakh will be available at a fixed rate of 8.5% across maturities whereas these are now being at 10-10.5%.”

OP Bhatt, chairman, SBI, says, “Our festive offers for retail borrowers will be out soon and we believe that if we bring down rates, consumers will borrow because typically people do buy cars or houses during the festive season.’’

However this strategy of attracting customers by reducing the rate is not in swing among the private banks.

Pralay Mondal, Head, Retail assets, HDFC bank, said, “There is no question of reducing interest rates for consumers even if it is the festive season. In a rising interest rate regime, funds are not going to become cheaper.”

PC John, of Federal Bank, adds, “We are not planning to bring down interest rates either on auto or home loans. Those banks with surplus liquidity may want to cash in on the festival season.We have just enough liquidity.”