PSU Banks Lower Interest Rates
PSU Banks lower their interest rates on retail loan ahead of the festive season
How did this come about?
In the earlier edition of The UnBoxed report, we mentioned about the directive by RBI to the banks on discontinuing Zero EMI schemes. Now, the banks have to look for newer alternatives to attract customers this festive season. The Union Finance minister made a statement last week that the government will allocate more funds to PSU banks to offer retail loans. Soon after this, the PSU banks have lowered their interest rates on two wheelers and consumer durables to benefit from the festive season.
More about the development
Benefiting from the increased capacity, most PSU banks have been quick to respond by offering a special festive loan at lower interest rates, to buy consumer durables and two wheelers.
Some banks have also switched to a flat fee as processing charges as against a percentage of the loan amount. Few banks have even waived off the processing fee altogether.
These special loan offers are here to stay for the next 3-4 months.
Most banks have targeted their existing salary account holders for these offers.
PSU Vs. Private Banks
Private Banks generally have an edge over the PSU banks, as they have faster disbursement of loans. However, this recent development is the shot in the arm for most PSU Banks to cash in on the festive season.
For customers who want to walk into a shop and walk out with the goods, private sector banks and NBFCs are still more attractive as they have tie-ups with majority retail outlets and also they have their personnel who process documents at the storefront.
Private Banks are in no hurry to cut interest rates as they believe their rates are competitive and service offering is better.
About Retail Loans
Retail loans are small ticket loans with a tenure of up to three years. Most Banks offer this to their salary account holders, credit card customers or existing borrowers. For two-wheelers, private banks and non-banking financial companies (NBFCs) lend at 18-20 per cent interest, while interest on their personal loans are upwards of 13 per cent.
Some of the offers this season
Dena Bank has pegged its home loan and car loan at 10.25% for loan up Rs 1 crore.
SBI has reduced interest rates by 20 basis points to 10.55% and lowered process fee to Rs 500.
IDBI Bank said that it would charge 10.25%, the lowest among PSU banks
Among others, Punjab National Bank said that it would charge 10.65% while Oriental Bank of Commerce said that it would peg it at 12%.
How did this come about?
In the earlier edition of The UnBoxed report, we mentioned about the directive by RBI to the banks on discontinuing Zero EMI schemes. Now, the banks have to look for newer alternatives to attract customers this festive season. The Union Finance minister made a statement last week that the government will allocate more funds to PSU banks to offer retail loans. Soon after this, the PSU banks have lowered their interest rates on two wheelers and consumer durables to benefit from the festive season.
More about the development
Benefiting from the increased capacity, most PSU banks have been quick to respond by offering a special festive loan at lower interest rates, to buy consumer durables and two wheelers.
Some banks have also switched to a flat fee as processing charges as against a percentage of the loan amount. Few banks have even waived off the processing fee altogether.
These special loan offers are here to stay for the next 3-4 months.
Most banks have targeted their existing salary account holders for these offers.
PSU Vs. Private Banks
Private Banks generally have an edge over the PSU banks, as they have faster disbursement of loans. However, this recent development is the shot in the arm for most PSU Banks to cash in on the festive season.
For customers who want to walk into a shop and walk out with the goods, private sector banks and NBFCs are still more attractive as they have tie-ups with majority retail outlets and also they have their personnel who process documents at the storefront.
Private Banks are in no hurry to cut interest rates as they believe their rates are competitive and service offering is better.
About Retail Loans
Retail loans are small ticket loans with a tenure of up to three years. Most Banks offer this to their salary account holders, credit card customers or existing borrowers. For two-wheelers, private banks and non-banking financial companies (NBFCs) lend at 18-20 per cent interest, while interest on their personal loans are upwards of 13 per cent.
Some of the offers this season
Dena Bank has pegged its home loan and car loan at 10.25% for loan up Rs 1 crore.
SBI has reduced interest rates by 20 basis points to 10.55% and lowered process fee to Rs 500.
IDBI Bank said that it would charge 10.25%, the lowest among PSU banks
Among others, Punjab National Bank said that it would charge 10.65% while Oriental Bank of Commerce said that it would peg it at 12%.
Source...