Most lenders are tapping into the festive season demand by offering special schemes on loan products, with the majority of sops offered in the home, vehicle, gold and personal segments. Banks are also relying heavily on digital lending to drive festive season loan demand, which is typically the strongest in the third quarter, and have partnered with several e-commerce and offline brands.
Bankers are expecting consumer demand to return back in full swing after two years of a lull owing to the pandemic. Buyers who had held back in the pandemic are expected to increase spends on consumer durables and holiday travel, which will spur personal loans, HT Solanki, head of mortgage & other retail assets at Bank of Baroda, said. Overall, banking sector credit grew by 15-16% in July and Au-gust, as per the data released by the Reserve Bank of India (RBI), and the growth is led by personal loan segment, which includes home, vehicles, education and consumer durables segments.
“We expect demand for personal and car loan, and higher spend on credit card during this festive season. Homebuyers consider the festive season auspicious for buying new properties or moving into new homes,” Sanchay Sinha, country head, retail banking, South Indian Bank, said.
On home loans, major public sector banks including Bank of Baroda, Union Bank of India and Punjab National Bank have completely waived processing fees, while State Bank of India (SBI) has said that it will charge only 50% processing fees during the festive period. Similarly, private sector bank ICICI Bank has also waived half its processing fee on home loans. Banks normally charge 0.25-1% of the home loan as processing fee. HDFC Bank is offering top-up loan of up to Rs 50 lakh on existing home loans.
On car loans, Bank of Baroda is charging an interest rate of 7.95%, 25 basis points (bps) lower than the normal rate. HDFC Bank has started a fast car loan approval, through which it will disburse car loan in 30 minutes and ICICI Bank is offering 100% loan amount based on the value of both new and used cars. Banks are also offering pre-approved personal loans and gold loans at discounted interest rates.
HDFC Bank is offering personal loan of up to Rs 40 lakh in 10 seconds and has waived 50% processing fee on gold loans. Bank of Baroda will disburse gold loan of up to Rs 25 lakh digitally. ICICI Bank, which charges pre-closure charges of 3% on personal loans, has waived these fees even after payment of 12 equated monthly installments (EMI).
Banks have leveraged their digital platforms, cards and tie-ups for lending for discretionary spends such as electronics, home decor, travel and apparel. Discounts on purchases made through cards on discretionary spends covers almost the entire gamut brands and products. Some of the well-known names include Reliance Digital, Croma, Apple, Samsung, Flipkart, Amazon, Myntra, Bigbasket, Blinkit and MakeMyTrip. SBI Cards and Payment Services, which has 18.4% market share in terms of active cards, has announced 70 national offers and 1,550 regional and hyperlocal offers across 2,600 cities.