The largest mortagage lender, Housing Development Finance Coroporation (HDFC), has reduced its retail prime lending rate (RPLR) by 50 basis points, effective from December 22. The interest on floating rate home loans up to 20 lakh dropped to 10.25% while the interest on floating rate home loans above 20 lakh dropped to 11.25 %. The corporation has also reduced rates on deposits by 50 bps across all maturities.
The advantage of a cut in RPLR will accrue to all the existing floating rate customers over a period of three months based on their respective reset dates, Renu Sud Karnad, joint managing director, HDFC, said.
Similarly, the rates of interest on loans to NRI?s have also been reduced, said Karnad. HDFC will also reduce its deposit rates by 50 bps across all maturities effective from December 23. On an incremental basis, retail deposits for the first seven months (April to Oct? 08), formed 62% of HDFC?s funding requirement.
Karnad said, ?We have been able to bring down our costs due to improved operational efficiency and good quality portfolio.? As in the past, HDFC has ensured that reduction in the cost of its resources translates into a benefit in terms of lower costs for both existing and new customers. HDFC continues to efficiently manage its liabilities and reprice its debts, said Karnad.
Other banks and housing finance companies, both public and private sectors, have started reducing their interest rates, while the remaining ones are likely to take a call soon.
Union Bank of India reduced its deposit rates across various maturities by 50-150 basis points since January 1, 2009. Bank of Rajasthan, has also reduced its interest rate on home loans upto 1.5% since December 22, 2008. Punjab National Bank (PNB) and Bank of India are some of the other banks that are likely to take a call on their interest rates shortly.
Speaking to FE, TS Narayanasami, Bank of India CMD, said that his bank would decide on cutting its rates on Monday.
PNB chairman and managing director KC Chakrabarty told reporters on the sidelines of a CII event in New Delhi that the bank will review the rates by month-end. ?We may cut deposit and lending rate further?, added Chakrabarty.
In the case of Union Bank, the maximum interest rate is capped at 8.75% for the term one year and above.
