Banks have finally started cutting lending rates with ICICI Bank, the country’s second-largest private sector lender today announcing a 25 to 50 basis point reduction in interest rates on new home loans with immediate effect.
A bank spokesperson said new home loans of up to Rs 20 lakh would come at an interest rate of 9.75 per cent against 10 per cent now.
For home loans of Rs 20 lakh to Rs 30 lakh the interest rate has been reduced from 10.5 to 10 per cent. New home loans of over Rs 30 lakh will carry a rate of 11.5 per cent, against 12 per cent at present.
| HOMING IN ON RATE CUTS | ||
| Loan amount | Old rate | New rate |
| Up to Rs 20 lakh | 10.0 | 9.75 |
| Rs 20-30 lakh | 10.5 | 10.0 |
| >Rs 30 lakh | 12.0 | 11.5 |
| Figures in % | ||
The bank has, however, decided not to change its prime lending rate (PLR) for the moment. ICICI Bank’s benchmark rate was earlier reduced 50 basis points to 16.75 per cent. The floating reference rate was also reduced by the same margin, to 13.75 per cent.
Meanwhile, UCO Bank has reduced its benchmark prime lending rate (BPLR) 50 basis points to 12.50 per cent with effect from March 1. It also announced a concession of 50 basis points for home loans above Rs 20 lakh and auto and consumer loans disbursed till June 30. Under the scheme, the concession in the three segments will accumulate over the tenure of the loan and will be set off against the past few EMIs.
Another Kolkata-headquartered lender, United Bank of India, has reduced its BPLR by 25 basis points to 12.50 per cent, with effect from March 5. Deposit rates have also been realigned in different maturities.
RBI announced a 50 basis point reduction in the repo and reverse repo rates on Wednesday, after which public sector Union Bank of India and Bank of Baroda followed with a 50 basis point reduction in their PLR, to 12 per cent from April 1.
Overall, though public sector banks have reduced their benchmark rates by up to 250 basis points from October 2008 following steep reductions in RBI’s policy rates, private sector players, including ICICI Bank, have reduced their PLR by around 50 basis points.
