the festive season.
A major factor behind some optimism for sales to perk during the festive season despite a declining trend since the beginning of the year is the recent move by banks to lower interest rates and processing fees on auto loans at the behest of the government.
The country's largest bank State Bank of India during announced this week that it was reducing interest rates for auto loans from 10.75% to 10.55%, while reducing the processing fees for cars from 0.51% of the loan amount to a flat rate of Rs 500. SBI is also running a special festival offer for its salary account holders and giving two-wheeler loans with interest rate starting at 12.05%.
Punjab National Bank has also slashed its car loans rate to 10.65% and two-wheeler loans rate to 12.2% and waived processing fees on both of them. Bank of India said it cut its interest rates for two-wheelers to 11% with no processing fees, while Central Bank of India said it was waiving processing fees of Rs 2,000 on car loans and Rs 500 on two-wheeler loans.
At IDBI, auto loans are now being offered at the base rate of 10.25% and processing fees have also been waived. Indian Bank as part of its festive season offer is giving a combo deal for home loans at its base rate and car loans at a discounted rate of 10.20%. While Corporation bank reduced its interest rates for car loans by 1% to 10.65% and is waiving 50% of the processing fees, Dena Bank is offering a combo deal for car and consumer durables with housing loan. The government lender is offering consumer durables loans along with housing credit at 11.75%.
Private lender Kotak Mahindra Bank said it is hopeful that the pent up demand will help drive growth for auto loans during the season and said that it is working closely with car manufacturers and dealerships for offers.
Federal Bank is running a scheme on auto loans portfolios and as a part of its scheme, the bank is waiving processing fees. Axis Bank is also readying schemes for Maruti and Hyundai cars where the lender will offer a combination of benefits, including lower processing fees and softer interest rates. It is also working on a special scheme targeted at government employees.