This is for the first time that another...
nationalised bank has undercut SBI.
Following demonetiosation, the public sector banks have been flushed with huge cash triggering a rate war and loan growth since April has been almost negligible during the current financial year.
Following the cut in rates by SBI to 8.6 percent for women and 8.65 percent for others, HDFC and ICICI banks cut rates to offer home loans 5 bps higher than that of SBI.
SBI may now further cut rates as it has kept some head room for further reduction.
Recently, while announcing the rate cut, SBI chairman Arundhati Bhattacharya said that the bank had increased the spread on the home loan as part of a 'business strategy' and might again revise its rates depending on what the competition does.
While the government has nudged banks to cut lending rates, the thrust on home loans is also driven by the bank's search for a secure loan that will provide better returns than government securities. BoB has also cut rates on car loans to 8.85% and on loans against mortgages to 10.35%.
In a statement, BoB said subsequent to reduction of benchmark lending rates, i.e. MCLR (marginal cost of lending rates) by 55 bps to 75 bps across all tenors with effect from January 7, 2017, BoB has reduced home loans by 70 bps to 8.35% — the lowest among all lenders. The revised rate of interest shall be applicable to all loans sanctioned with effect from January 7.
"On a home loan of Rs 50 lakh, reduction in interest rate by 0.70 percent by Bank of Baroda will help a homebuyer to save Rs 2,496 per month and approximately Rs 9 lakh during the loan tenure of 30 years," the bank said in a statement. The bank is inviting existing borrowers of other lenders to get the benefit of lower rates.
Another public sector lender, Bank of India (BoI) has also revised its retail lending rates. Home loans will be available at 8.65 percent for women and at 8.7 percent for others, while vehicle loans will be offered at an interest of 9.35 percent.