Union Bank of India (UBI) on Friday said it has cut interest rates on home loans above R30 lakh by 25 basis points (bps). While loans up to R75 lakh are being approved on the base rate of 10.5%, loans between R75 lakh and R5 crore are offered at 10.75% with effect from Thursday.
The move which is expected to ramp up bank's retail loan portfolio, will benefit both new and existing borrowers. UBI also cut rates on education loan by 150-200 bps, while giving additional 50 bps concession to girl students. Education loan up to R7.5 lakh are now offered at 12.75%, while loans above that limit are offered at 12.5% starting Thursday. The bank had already waived processing fees on all home and auto loans under a special festival season scheme.
The public sector lender's total retail advances stand at R17,620 crore as on September 30, which forms about 9.97% of total advances. Home loans are the major contributor to UBI's retail loan portfolio, covering about 63.36%. Education loans form 11.6% of total retail assets for the bank. The move is in line with other players who have recently announced reduction in retail loan products, to boost their loan growth in the festival season.
On a year-on-year basis, non-food bank credit increased by 15.5% in October as compared with the increase of 18.2% in the same month last year, monthly data put out by Reserve Bank of India on Friday, said. Retail loans increased by 14.1% in October, to Rs 8,33,734 crore as compared with the increase of 14.3% last year.
Earlier this month, Karnataka Bank had cut interest rate on housing and car loans by 50 bps, to boost its retail portfolio. While on October 31, state-run lender IDBI Bank had cut rates on new floating rate home loans above R30 lakh by 25 basis points. Similarly, Federal Bank, which has a home loan portfolio of about Rs 5,000 crore, offers all home loans at the base rate of 10.45%, till December 31. The private sector lender aims at increasing its home loan portfolio to Rs 6,000 crore by