Home loans to be cheaper FM asks banks to pass on rate cut ben­e­fits to cus­tomers

Accommodation Times - - ..Housing Finance.. -

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.

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