State-owned Bank of Maharashtra slashed its home and car loan rates in an aggressive push that took its interest charges below the rates offered by the country's largest lender State Bank of India and mortgage lender Housing Development FInance Corporation.
The Pune-headquartered BoM has reduced home loan rates by 40 basis points to 6.4% from 6.8% earlier and car loan rates by 25 basis points to 6.8% from 7.05%. These fine rates will be available for customers with best credit scores from December 13, the bank said.
One basis point is one-hundredth of a percentage point. SBI offers home loans at a minimum of 6.7% a year and car loans at 7.25%. HDFC's festive rate on home loans also starts at 6.7%.
"The rate cut is to increase the demand and to increase our credit-deposit ratio," BoM managing director AS Rajeev told ET.
The present reduction may not impact net interest margin (NIM) much as increased credit will fetch more net interest income (NII). This is mainly due to switching from investments to credit, that too quality credit due to higher Cibil rating," he said, expecting a sobering impact on credit cost going forward.
BoM was among a handful of lenders which reported a rise in NII as well as NIM for the second quarter ending September over the same period last year while most of the public sector lenders witnessed a fall in these ratios following lending rate cuts ahead of the festive season.
Its NIM was at 3.27% for the second quarter as against 2.57% in the year ago period.
Rajeev said there would be no immediate change in deposit rates. He said that rates have bottomed out and may continue to be around this level during this fiscal with a maximum of 25 bps upward movement.
With the latest rate cuts, the bank is expecting home loans to grow at 25% rate, better than the 20% growth it is witnessing now.
"We are providing one of the lowest interest rates in retail loans especially for housing and car loans in the industry," executive director Hemant Tamta said.
Source : Economic Times
No comments:
Post a Comment