Allahabad Bank slashes lending and borrowing rates

Written by:
Subscribe to Oneindia News

New Delhi, Feb 5 (UNI) Allahabad Bank today became the first public sector bank to announce a cut in lending as well as deposit rates with effect from February 10, in line with the a similar decision taken by the HDFC Bank and taking into account the changed macro-economic environment.

The lending rates on retail credit have been slashed by as much as 50 basis points (bps) to 100 bps for housing loans, lending for consumer durables, car loans and education loans.

Interest rates on deposits have been reduced by 25 basis points in all time buckets having a tenure of two years and above upto ten years.

However, for deposits of shorter tenure interest rates have been increased. For instance, for deposits ranging between 61 days to 180 days, the interest rates have been revised upwards by 75 to 100 bps to make these buckets more attractive.

The Bank informed the BSE that the change in interest rates has been necessitated by reduction in the cost of incremental funds, falling yield in G-Secs and overall market scenario.

In the housing loan segment, the interest rates have been reduced by 50 to 75 bps across the board in all tenure buckets.

Similarly, interest rates on Car Loans and Consumer durables Loan has been cut by 100 bps straightway in all categories. Education Loan too has been made softer with a cut in the Interest rates by 25 to 100 bps.

The Bank said reduction in lending rates will reduce the interest burden of the students, home loan borrowers as well as those who take loans for buying consumer durables. The reduction is applicable for new loans in both the categories, namely floating and fixed rates.

''The Bank trusts the reduction will make the Bank's Loan Schemes more attractive and comfortable to borrowers,'' a statement by the Bank said.

HDFC took the lead in reducing its interest rates by 25 bps. ICICI Bank as well as some other public sector banks are expected to follow suit in the run up to the Budget.

Global interest rates, especially in the United States have move Southwards. This has put pressure on Indian Banks to reduce the cost of borrowing.

But a key factor which is coming in the way is the inflation rate, which continues to hover at around four per cent with an upward bias.

Trading in Government Bonds rose to record last month as demand for debt increased on speculation that policy maker will cut borrowing cost for the first time in five years. The RBI in its recently announced review of credit policy left unchanged all rates of interest-- the PLR, the repo rate and reverse repo rate.

Finance Minister P Chidambaram, however, had advised the Banks to reduce lending rates. The Banks have taken a cue from his advice.


Please Wait while comments are loading...