IDBI Bank pares floating loan rate by 50 bps

IDBI Bank pares floating loan rate by 50 bps

BS Reporter / Mumbai October 15, 2007

Industrial Development Bank of India (IDBI) has cut floating interest rate on new home loans by 50 basis points to 10.5%. It has also floated a scheme called "buy now, pay later" to provide assistance borrowers purchasing under construction properties.

"The decision is cut rate is driven by competition and the new concessional rate of 10.5% will be applicable to loans disbursed till December 31, 2007", R K Bansal, CFO, IDBI said.

Last month, the public sector bank had cut the fixed home loan rate by 100 basis points. However, offtake under this category is very small as customers want flexibility to get benefit any downward revision in interest rates.

Major players in home loan players State Bank of India, ICICI Bank and HDFC have already cut home loans rate to boost the sagging credit demand. The spiraling real estate prices and elevated lending rates leading to rise in amount for Equated Monthly installments has impacted loan growth.

In an effort to provide better cash flow management to home buyers, it has come up with a new scheme 'buy now, pay later', where borrowers buying properties under construction could choose a moratorium up to 18 months on payment of equated monthly installments (EMIs).

Bansal said the interest rate for the scheme will same as normal rates. However, the loan to value ratio norm will be stringent. The loan amount will be maximum 85 per cent of the value as against 90% under regular scheme.

IDBI