Get ready to spend more as PSU banks cut lending rates

Time to spend more 

WISHING to spend more this festive season? Here is a good piece of news for you. In a bid to tide over the somber sentiments prevailing among the consumers, three public sector banks...

Punjab National Bank (PNB), Indian Bank and Oriental Bank of Commerce (OBC) on Tuesday announced special offers for auto and consumer durable loans, which would marginally lessen the EMI burden. The largest public sector bank State Bank of India had earlier indicated that it would also cut rate of interests. Many lenders have even decided to waive processing fees on retail loans. PNB has cut vehicle loan rates by 1.10 percentage points to 10.65 percent. Consumer durable loan rates to go down by 1-2 percent to a flat 12.75 percent. PNB has also waived the processing fee on home loans. The offer will be valid till January 31 next year.

Indian Bank has cut interest rates on home loans to 10.20 percent from 10.45 percent earlier. The bank will also give vehicle and personal loans at the same rate.

OBC has decided to slash rate on personal and consumer durable loans by 0.25 percentage points to 12.50 percent for government employees.             

The measure is expected to give a fillip to the automobile sector which is not in a good shape as sales of cars sales in India have fallen 4.7 percent in the first six months of the fiscal year, the sharpest decline in half-year sales since 2002-2003. The decision by leading banks will not only push demand but also spur growth in a faltering economy. However, the offers come with catch. Thus, PNB will offer consumer durable loans only to employees with salary account with the bank. Last week, the Central government had decided to give additional funds to the PSU banks to enable them offer more credit to auto and consumer durables sectors to stimulate demand and spur growth. The decision to increase the quantum of capital infusion was taken at a meeting between finance minister P Chidambaram, RBI governor Raghuram Rajan and economic affairs secretary Arvind Mayaram.