Indian Overseas Bank has reduced home loan rates, for loans up to Rs 30 lakh, by 25-100 basis points. A 50-bps cut in auto loan rates was also announced.
Though the bank kept its base rate unchanged, it reduced the spreads on home and auto loans.
Home loan customers will now have to pay 10.5 per cent for loans up to Rs 30 lakh.
Earlier the bank had three slabs, between 10.75 and 11.25 per cent, which have been combined. Irrespective of tenure, the new rate will be 10.5 per cent, said a bank official.
For vehicle loans, interest rate has been reduced by 50 basis points.
For loans repayable within three years, interest rate has been reduced from 12.75 to 12.25 per cent.
For loans above three years, interest rate has been reduced from 13.25 per cent to 12.75 per cent. These reduced interest rates for home and vehicle loans would be applicable for new loans from August 9.
“The cut in home and auto loan rates has been taken keeping in mind the festival season and also due to the steps taken by RBI during the policy,” said M Narendra, chairman and managing director, IOB.
RBI had reduced the statutory liquidity ratio — the proportion of deposits that banks need to invest in government bonds — by 100 basis points to 23 per cent. The reduction has the potential to release Rs 60,000 crore in the banking system.