Banks reduce loan interest rates

IDBI Bank today reduced its floating rates on housing loans by 50 basis points to 10.50 per cent, following in the footsteps of the State Bank of India (SBI) and ICICI Bank, the two largest lenders in the country.

An IDBI Bank release said the new rates were for loans taken between October 12 and December 31.

The bank has launched a “buy now, pay later” scheme, under which loans for properties under construction can be paid in equated monthly instalments after a moratorium of 18 months.

While the SBI has cut interest rates on home, auto and personal loans by 50-100 basis points, ICICI Bank has reduced its rates by 0.25-0.50 per cent.

Bank of Baroda, Axis Bank and HDFC have also reduced rates.

In September, HDFC had cut its rates on floating home loans by 0.5 per cent.

The cuts are a consequence of a fall in the rate of growth of credit to 24 per cent in the first half of the fiscal from 31 per cent a year ago.

This is the result of the Reserve Bank of India (RBI) adopting a tighter monetary policy, to check liquidity and curb inflation.

Banks have been clamouring for a softer interest regime ahead of the RBI’s half-yearly monetary review on October 30.

Recently, finance minister P. Chidambaram had asked banks to cut interest rates to boost sagging demand in sectors such as auto, paper