State-run lenders refuse to take cues from Reserve Bank of India?s recent rate hike and continue to woo retail borrowers with low interest loan offers during the current festive season.
The lenders have also kept corporate loan rates unchanged.
The public sector banks that made up their mind ahead of RBI?s mid-quarter policy review decided to keep lending rates unchanged as it may jeopardise its plans to build loan books during festivities. ?We are at the end of half-year and we have to augment our credit portfolio. Loan demand has remained below expectation. Naturally, one would not like to raise rates and hurt the recovery (in loan growth). One has to look at market conditions, competition before revising rates,? UBI executive director, SC Kalia said.
Retail loan rates
Most PSU banks have been wooing customers to make big-ticket purchases such as cars, homes and consumer durables by offering discounts during the festivities that started with Onam and Raksha Bandhan in August and is expected to continue until Diwali in November. Post-RBI rate hike there has been no let up in easy loan schemes from the state-run banks.
Corporation Bank said it will now offer home loans up to Rs 3 million at 7.75% rate for the first year of repayment tenure or 50 basis points lower than its previous offer. The interest rate on the bank?s new housing loan scheme is possibly the lowest offered by any lender at this point and is below State Bank of India?s popular 8% Easy Home Loan scheme.
The new loan schemes will be available to the bank?s customers till Dec 31. ?Loan demand has started picking up since July-end but it is still below our expectations. The idea (behind these special loan schemes) is to improve demand,? a top official at Corporation Bank said.
Punjab National Bank has also announced car and home loan schemes at discounted rates between Aug 20 and Dec 31. Similar schemes have been launched by other public sector banks like Allahabad Bank, Bank of India and UCO Bank. State Bank of India said it will review extending its 8% housing loan offer beyond Sep 30.
Corporate loan rates
When it came to lending to corporates, banks refused to budge from the lower rate regime as they claim that rates on loans offered to companies have hardened even before RBI?s latest policy rate hike. ?Most banks have raised their benchmark prime lending rate starting August. One can?t raise rates further until demand picks up,? a top executive with a Mumbai-based bank said.
