Home loans to be cheaper FM asks banks to pass on rate cut benefits to customers
Interest rates on home loans are likely to get lower soon, with Finance Minister Arun Jaitley asking banks to pass on the rate cut benefits to the buyers as they have promised greater rate cuts in the coming days. At a press conference after his meeting with bank chiefs, Mr Jaitley said he discussed the transmission of Reserve Bank rate cuts by banks, among other issues. Mr Jaitley expressed hope that banks will be able to further lower lending rates following a series of rate cuts from the Reserve Bank of India (RBI). Many banks have lowered their lending rates this year after the Reserve Bank lowered repo rate or main lending rate by a combined 75 bps this year. But the quantum of rate cuts by banks lag the reduction in the RBI's policy rate. The country's largest lender, State Bank of India, for example, has lowered its base rate by 30 bps this year. It base rate currently stands at 9.70 per cent. Bankers have blamed tight liquidity and slower credit growth as reasons for not cutting rates aggressively. The loan growth for banks for the fiscal year to end-March was the slowest in 18 years. Arundhati Bhattacharya, the chairperson of SBI, said that it has not seen much pick-up in demand since the cutting rates, though it is too early to assess the impact of the rate cut on credit demand. Banks on their part, Mr Jaitley said, have asked the government to relook at small savings rates. Many bankers had earlier said that high rates on small savings schemes like public provident fund makes them keep deposit rates high and this holds them from lowering lending rates.