Retail loans become cheaper

As the festive season nears, banks are not only offering higher deposit rates but also reducing rates for their retail loans. This is despite a tight monetary policy.

Two major state-owned banks--Bank of Baroda and Union Bank of India---have decided to slash rates by 25 basis points on their home loan rates. They are keen to continue with the lower rates even after the festive season if the Reserve Bank of India (RBI) announces cuts in repo rate and the statutory liquidity rate (SLR) in its forthcoming credit policy on October 24.

MD Mallya, chairman & managing director, Bank of Baroda, confirmed that his bank would charge 0.25% less on the interest rates for housing and vehicle loans on account of the festive season. The scheme, which began on October 1, will continue until the end of the month.

“We find it a good opportunity as it helps us make our relationship stronger with our customers. But we are not offering any high interest rates on any of the term deposits,'' he said.

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