<div>Auto, home and corporate loans will become cheaper with banks, led by market leader State Bank of India (SBI), lowering the lending rates by up to 0.50 per cent in response to the <a target="_blank" href="http://www.businessworld.in/en/storypage/-/bw/a-formula-for-growth/752475.37467/page/0">easy money policy of the Reserve Bank</a>.</div><div> </div><div>While the SBI has reduced the lending rate by a marginal 0.05 per cent, private sector HDFC Bank and Federal Bank announced reduction in a few segments like auto loans to the tune of 0.25-0.50 per cent.</div><div> </div><div>Public sector IDBI Bank and Royal Bank of Scotland (RBS) had reduced lending rates by 0.25 per cent and 0.75 per cent respectively on Tuesday.</div><div> </div><div>The lowering of the interest rates follows the decision of the RBI to cut key benchmark lending (repo) rate by 0.25 per cent and deciding to inject additional liquidity of Rs 18,000 crore by a similar cut in Cash Reserve Ratio (CRR).</div><div> </div><div>With the reduction, SBI's base rate or the minimum lending rate will now go down to 9.70 per cent from 9.75 per cent effective 4 February.</div><div> </div><div>"Through this reduction, we are passing on a little more than what we gain through the rate cut by the RBI," a senior SBI official said after a meeting of the asset liability committee of the bank.</div><div> </div><div>HDFC Bank has lowered interest rate on car and two-wheeler loans by 0.25 per cent and 0.5 per cent respectively.</div><div> </div><div>On commercial vehicles, the interest rates would be reduced by 0.25 per cent, a official said adding that the new rates would be effective from 1 February. </div><div> </div><div>Mumbai-based HDFC Bank currently offers car loans between 10.75 per cent and 11.75 per cent. Post rate cut, the range would be 10.5-11.5 per cent for repayment period between 36 and 60 months.</div><div> </div><div>Accordingly, interest rate on two-wheeler loans would be adjusted to between 19.25 per cent to 22.25 per cent.</div><div> </div><div>With regard to commercial vehicles, the rate on heavy commercial vehicle will be down by 0.25 per cent to 11 per cent while rate for light commercial vehicle will get reduced to 13.75 per cent from existing 14 per cent.</div><div> </div><div>The auto loan portfolio of the bank currently stands at about Rs 33,000 crore. The auto loan advances of the bank has been witnessing a growth of 12 per cent.</div><div> </div><div>IDBI Bank has already lowered its base rate by 0.25 per cent to 10.25 per cent effective February 1.</div><div> </div><div>SBI, which has the most aggressive offering among the domestic banks, had last cut its base rate by 0.25 per cent last September following the two CRR cuts by RBI earlier.</div><div> </div><div>The largest bank, has however, not cut its deposits rates as the banks asset liability committee felt its offering is among the lowest in the market at present, the official said.</div><div> </div><div>"We are gaining around Rs 275 crore and passing around Rs 350 crore...this will have a very negligible impact on our margins," the SBI official said, adding the outstanding loans under the old benchmark prime lending rate will also go down by a similar 0.05 </div><div> </div><div>per cent.</div><div> </div><div>A majority of bankers said they would transmit the benefits of the RBI rate cut.</div><div> </div><div>Last month, HDFC Bank had reduced its base rate by 0.1 per cent to 9.7 per cent, the lowest in the market.</div><div> </div><div>At the same time, the benchmark prime lending rate (BPLR) of the bank was also slashed by a similar margin to 18.20 per cent.</div><div> </div><div>(PTI) </div><div> </div>
