Taking a cue from its peers, state-run Central Bank of India is planning to cut rates by 25 to 50 basis points on a few retail products, but the bank has no intention to include the most sought after home loans and educational loans in the list.
“As we are already giving concessions on home and education loans, there was no need to revise them downwards at this moment,” Central Bank’s chairperson and managing director, HA Daruwalla said. The bank’s home loan rate is currently at 10.5% in the fixed rate category and 9.5% in the variable floating rate structure. The rates are for loans up to Rs 20 lakh.
Talking to reporters on Wednesday, on the sidelines of Central Bank’s new agreement with Thomas Cook to offer MoneyGram international money transfer service in Mumbai, Daruwalla, said, “We can’t bring down our interest rates until our cost of funds was lowered, still, we are seriously thinking of reducing our rates within the range of 25-50 basis points on certain retail products in the near future”. Some of the retail products that are likely to see a rate-cut by the bank include Cent Trade, Cent Mortgage, and loans being provided to sectors like SME, SSI, and cold storages.
On the strategic alliance with Thomas Cook, Daruwalla said that in addition to increasing the bank’s fee-based income, the agreement would also strengthen their customer base, which was hovering around 2.5 crore at present.
Institutions like HDFC and three government banks, namely, Allahabad Bank, Canara Bank, and Corporation Bank have recently slashed home loan rates between 25 bps to 75 bps and many banks are expected to follow in their footsteps.
Prime lending rates, however, are not tampered with. Apart from home and educational loans, Central Bank is likely to bring
down rates on 23 retail products.
Meanwhile, the bank’s asset and liability committee that takes a call on its rate structure will be meeting next week.
It is likely that the bank will come out with an official announcement after that, officials familiar with the programme said.
Interestingly, the issue on lowering interest rates is likely to come up again when bankers meet the finance minister, P Chidambaram on February 12.
Nevertheless, Daruwalla hoped that like other banks, her bank would also go for rate-cuts during the first quarter of next financial year.