Hinting at easing of borrowing costs for retail and corporate customers, ICICI Bank’s newchief Chanda Kochhar has expressed hope that interest rates could fall to single-digit level in the coming months. Meanwhile, Corporation Bank has reduced rate of interest on housing, vehicle, education and personal loans with effect from May 4 while Bank of India on Tuesday reduced interest rates on deposits of less than Rs 1 crore for one year and above by 0.25 %, effective from May 8.
“I should hope for that because that is going to be good for the economy,” Kochhar said in an interview when asked whether she foresees single-digit interest rates by middle of this year as predicted by her predecessor KV Kamath.
For Corporation Bank, housing loans up to Rs 30 lakh, the floating interest rates for various tenors range from 8.75% to 10.25%, for Rs 30 lakh to Rs 50 lakh, the floating interest rates range from 9.50% to 10.75% and for Rs 50 lakh & above, the floating rates range from 10% to 11%. The revised fixed interest rates are 11% and 11.50% depending upon the loan amount.
The vehicle loans with tenure of up to 3 years will carry a revised interest rate of 10.5%, 3 years to 5 years at 11% and above 5 years to 7 years at 11.25%.
Education loans up to Rs 4 lakh will be charged at 11.5%, Rs 4 lakh and above and upto Rs 7.5 lakh, at 13%. Above Rs 7.5 lakh, the interest rates are fixed at 11.5% for secured and 13% for unsecured loans.
Personal loans will now carry interest rates of 13.5% and 14.5% depending upon the category of customers. With the reduction, one year to less than five year maturity and 5 years and above maturity deposits of BoI will now offer a rate of 7% as against 7.25 % earlier.
Also, interest rates for floating rate deposit scheme will be 0.25% over the term deposit rates applicable in the relevant tenures for maturities of three years and above, the bank said.
This rate will be reset at the beginning of each calender quarter, it said.
BoI has also waived the penalty on premature withdrawal of all domestic rupee term deposits irrespective of date and amount, the bank said.
Kochhar, who assumed office of ICICI Bank’s managing director and CEO this month, said there was room for further correction in interest rates. “I feel that some more correction can take place in interest rates, because given where inflation is and given the comfortable liquidity position, I think a little more correction can take place,” Kochhar said.
ICICI Bank was the first bank to cut lending and deposit rates after RBI slashed its key short-term policy rates on April 21. Asked whether ICICI Bank was considering further rate cuts, Kochhar said that its rate would “move as per how it moves for whole banking system actually”.
“I think that correction has come to a standstill because a large part of govt borrowing programme was announced. But, now some clarity has emerged on the borrowing programme… I think some cooling off in the market will happen… some more correction would take place,” Kochhar added.