Within days of government promising more funds to public sector banks, two state-owned lenders PNB and Oriental Bank of Commerce (OBC), on Tuesday, cut interest rates on auto and consumer durable loans by up to 2.50 percentage points to cash in on the festive demand.
The rate of interest on car loans has been reduced by over one percentage point to 10.65 per cent on fixed basis, PNB said in a statement.
Similarly for two-wheeler, the interest rate has been slashed to 12.25 per cent. The rate of interest on personal loans for purchase of consumer durables has been brought down to 12.75 per cent on fixed basis.
These rates are lesser by one percentage point to 2.50 per cent from the existing floating rates, it said.
Besides, it said, there will be full waiver of upfront fee and documentation charges. In case of car loan, the bank will finance to the extent of 100 per cent of the ex-showroom price of car.
The festival offer is valid up to January 31.
According to OBC, the interest rate on commercial financing of four-wheelers (auto and taxis) has been reduced to 12 per cent from 12.25 per cent.
Similarly, personal loans and consumer durable loans have been reduced by 0.25 percentage point to 12.50 per cent for government employees while for other employees it has been brought down to 13.50 per cent. The new rates would be effective from October 10, the OBC said in a statement.
On home loan, PNB said, the bank has waived of upfront fee and documentation charges. However, the interest rates on home loan have been left unchanged. Loan up to Rs.5 lakh for purchase of consumer durables and furnishing of the existing fully constructed house at fixed rate of interest of 10.50 per cent, it added.
Last week, the government had decided to provide additional funds to public sector banks to enable them to extend more credit to auto and consumer durables sectors to stimulate demand and combat slowdown. The decision to increase the quantum of capital infusion was taken at a meeting between Finance Minister P. Chidambaram, RBI Governor Raghuram Rajan and Economic Affairs Secretary Arvind Mayaram.
The additional fund infusion would help in combating slowdown and boost output, it had added.
Meanwhile, IDBI Bank said it would offer home and auto loans to new borrowers at Base Rate with effect from Wednesday.
“As a festive season offer, we have decided to offer home and auto loans at Base Rate, which is now 10.25 per cent,” the state-run lender said in a release.
The bank has also decided to waive processing fees for both the loans during the period.
