Banks cut home loan interest rates and Term deposits

THE country’s largest and second largest lenders — State Bank of India and ICICI Bank — have brought down interest rates on various loans including new housing loans. SBI has also lowered interest rates on some term deposits. The move comes a few days after the finance minister asked banks to bring down interest rates.

The proposed rates are under a festival offer applicable for all new loans sanctioned on or after Monday and are valid up to end-December for SBI.

As part of the festival offer, SBI has reduced interest rates on all new home loans, car loans, twowheeler loans and personal loans. Home loans are now cheaper by 0.50% to 1% depending on loan maturities and amount of loan. SBI also gives discount if the salary account is with the bank and further discount if a higher margin is available. For home loans up to Rs 20 lakh with a tenor of up to five years, SBI has cut rates from 10.75% to 10%, for loans with tenor between five and 15 years rates are cut from 11.25% to 10.25%. For tenors from 15 to 20 years the rate is reduced from 11.25% to 10.5%. For loans over Rs 20 lakh, rate cuts are 25 basis points lesser on comparable tenors.

ICICI cuts floating home loan rates

ICICI Bank has also cut interest rates marginally by 25-50 basis points on home, car and personal loans. This is a part of the festive offer by the bank. On the home loan front, the rate cut is only for floating loans. The bank has, however, not bought down its interest rates for deposits.

Rates of SBI’s new car and two-wheeler loans have been reduced by 1% depending on the amount and maturity of the loan. New car loans are now available at 11% to 12%.

Similarly, personal loans are now cheaper by 0.50% to 1%. In addition to the above, the bank is offering 50% concession in processing charges on all the personal segment loans.

Source : Economic Times of India

RBI credit policy on 31st July

The next RBI credit policy is on 1st August. This is possible the most defining momement in the economic history our our country. The recent events are making the outcome of the credit policy very interesting and is keeping everyone guessing (Related news at RBI may not change rates, inflation under watch and Corporates foresee fall in rates: Survey ). Here are a few events that have to be considered by the RBI

1. The month of July witnessed USD 5 Billion invested in our stock market by Foreign Institutional Investors (FII).

2. The stock market cracked over 550 points in one day on 2th July following concerns on the corrections in the international markets led by the US. Read more and related news at Markets likely to correct further next week

3. The Indian Ruppee cracked 17 paise to move from Rs 40.34 to a US dollar to 40.51 causing a fair bit of appreciation for a single day.

4. India Inc growth at 5-quarter low - Read related news at India Inc growth at 5-quarter low

5. Crude prices soar above 77 dollars a barrel - Read related news at Crude prices soar above 77 dollars a barrel

Meanwhile, the banks have started decreasing their interest rates for their deposits. See related news at Fixed deposits to earn lower interest.... These moves by the banks are causing a fall in the rates offered by FMPs - Are FMPs losing their sheen?

China hikes rates to check credit, investment

Only this morning, i was mentioning that the rates could increase in China given the fast growth in GDP that it has shown for the 2nd quarter. This has happened. Please see the related news at China hikes rates to check credit, investment


This could mean that the global interest rates may inch up a bit leading to possibly no interest rates decrease by the RBI in its next credit policy. It will be interesting to see the impact of the rate hike in china across the world.

Some more 'Interest'ing news

Here is an extract from various sources on interest related news this morning. Read these news in relation to my previously submitted blog dated 29th June Inflation at 4.28%, Hits 14-month low

1. An 'Interest'ing climb down ahead - Indications are that interest rates will climb down

2. Inflation expected to rise to 4.32% - Will the actual interest rates climb down if inflation does not come down

3. Corporation Bank cuts interest rate on home loans - It does not matter, the bank has decided to cut the interest rate on home loans

4. China's GDP zooms at 11.5% - Will the chinese authority increase the interest rate and cause a flutter in the market.

There is defintely an expectataion in the fall of interest rates possibly leading to the following

1. Depreciation of the rupee
2. Increase in Bond values and hence increase in NAV of Bond Funds
3. Some interest back to real estate sector - See related news at Kotak Realty raises $400 million in 6 months