Last fortnight, The Reserve Bank of India (RBI) cut repo rate (the rate at which RBI lends to banks) and reverse repo rate (the rate at which banks keep surplus funds with RBI) by 100 basis points each. The repo rate is now 6.5 per cent, down from 7.5 per cent and reverse repo rate has come down to 5 per cent from the earlier 6 per cent, effective 8 December. Talking about the cuts, RBI governor D. Subbarao said, “The new rates are positive and decisive signals for banks to cut rates.” Loans. The good news for you is that the government is approaching state- owned banks to offer interest rates on housing loans up to Rs 20 lakh as per 2004 levels. You may be able to get a homç loan at 7-8 per cent, which is ar’ound 2-3 percentage points lower than the current rates.
Taking a cue from RBI’s move, ICICI Bank has already reduced its home loan rates from 13 per cent to 11.5 per cent for all home loans less than Rs 20 lakh. Just last month, the bank had increased its fresh home loan rates by 1 percentage point due to increased cost of funds. State Bank of India is expected to cut rates in the coining weeks. A few banks had decreased rates even before RBI’s latest measures.
Prime lending rates (PLR). Yes Bank was the first to cut its PLR by 50 basis points (bps). Its new PLR stands at 16.5 per cent against the earlier 17 per cent. State-owned Union Bank announced a cut in PLR by 75bps to
12.5 per cent. DFC Bank, too, has lowered Its PLR by 50 basis points. This move is expected to bring down rates for all loan categories. Deposits. HDFC Bank has slashed its deposit rates on some products. The rates for deposits with a maturity of six months and 15 days have been reduced from 10.5 per cent to 8,25 per cent. For nine months and 15 days, the rates are 9 per cent (earlier rate 10.5 per cent), while for one year and 15 days, the rates are now 10 per cent (earlier rate 10.5 per cent). The bank has also slashed the rates for two years and 15 days from 10.5 per cent to 9.5 per cent, making it the first private bank to cut deposit rates.
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