Tag: housing loan rates

ICICI Bank’s special festive offers for NRIs

Mumbai, Oct. 22:

ICICI Bank, India’s largest private sector bank, is offering flat processing fees on home loan to its Non-Resident Indian (NRIs) customers for the festive season.

The bank will charge a processing fee of Rs 5,000 on home loans up to Rs 75 lakh and Rs 10,000 on home loans above Rs 75 lakh, this up to October 31, 2013.

On loans below Rs 10 lakh, ICICI bank will charge a processing fee of 0.5 per cent on the loan amount. The bank also has a referral arrangement with ICICI Home Finance Co Ltd which provides property search facility in India.

Further, the private lender has also partnered with Thyrocare Technologies to give discounts on health check-ups offering 77 medical tests worth Rs 5,000 for Rs 1,500 for its NRI customers and their family members, the bank said.

Moreover, the bank’s NRI customers will get preferential rates on foreign currency conversion and a ‘no minimum balance savings accounts’ to resident family members of NRI customers

Rajiv Sabharwal, Executive Director, ICICI Bank, said, “These offers have been designed based on customer insights derived from serving 1.5 million NRI customers across more than 150 countries and processing over 2 lakh NRI transactions monthly.”

Syndicate Bank cuts interest rate on vehicle, consumer durable loans

Bangalore, Oct 22:  Business Line
Syndicate Bank has slashed the interest rate on vehicle loans, consumer durable loans and light and heavy commercial vehicle loans.

To commemorate its Foundation Day, the bank is offering home loans at 10.25 per cent (base rate) for both the existing and new borrowers irrespective of the loan amount.

Interest rate on two-wheeler loans for home loan borrowers has been reduced from 12.25 per cent to 11.5 per cent (base rate + 1.25 per cent). For others, it is 12 per cent (base rate + 1.75 per cent).

Interest rate on four-wheeler loans for home loan borrowers has been brought down from 10.9 per cent to 10.4 per cent (base rate + 0.15 per cent). Other borrowers will be charged at 10.75 per cent (base rate + 0.50 per cent).

Interest rate on loans to consumer durables has been brought down from 15 per cent to 11.75 per cent (base rate + 1.5 per cent) for home loan borrowers. For others, it is 12.75 per cent (base rate + 2.50 per cent).

Interest rate on loans to light and heavy commercial vehicles has also been brought down from 12.75 per cent to 11.5 per cent.

RBI ups repo rate by 25 bps; markets in free fall

Mumbai, Sept 20:  The Hindu Business Line

In his first credit policy since taking over earlier this month, the RBI Governor, Raghuram Rajan, has hiked the key policy repo rate.

The RBI has increased the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.25 per cent to 7.5 per cent with immediate effect.

It has also reduced the marginal standing facility (MSF) rate by 75 basis points from 10.25 per cent to 9.5 per cent with immediate effect. MSF is the rate at which banks borrow from the central bank.

The RBI has reduced the minimum daily maintenance of the cash reserve ratio (CRR) from 99 per cent of the requirement to 95 per cent effective from the fortnight beginning September 21, 2013, while keeping the CRR unchanged at 4.0 per cent.

Consequently, the reverse repo rate under the LAF stands adjusted to 6.5 per cent and the Bank Rate stands reduced to 9.5 per cent with immediate effect. With these changes, the MSF rate and the Bank Rate are recalibrated to 200 basis points above the repo rate.

“The need to anchor inflation and inflation expectations has to be set against the fragile state of the industrial sector and urban demand. Keeping all this in view, bringing down inflation to more tolerable levels warrants raising the repo rate by 25 basis points immediately,” RBI Governor, Raghuram Rajan, said in the mid-quarter policy review statement.

Highlights of the monetary policy review

Stock markets reacted negatively to the policy announcement. The Bombay Stock Exchange’s sensitive index Sensex dropped nearly 500 points to a level of 20,155 points at 11.30 a.m, minutes after the announcement. Except software majors – TCS, Wipro, Infosys and pharma major Sun Pharma,which were flat, all other constituents of the index were in the red.

The rupee opened at 62.04, moved up slightly to 61.88 before reversing and trading at 62.38 to the dollar at 11.32 a.m.

Cautious unwinding of exceptional measures

Explaining the rationale for its moves, the RBI said in a statement that it had earlier taken a number of exceptional measures to tighten liquidity with a view to dampening volatility in the foreign exchange market. These had the impact of raising the effective policy rate to 10.25 per cent, and were intended to maintain tight liquidity conditions till there was improved prospects of stable funding took efect. With the improvement in the external environment, the RBI is now in a position to contemplate easing these measures, it said.

Inflation high

Conceding that “inflation is high and household financial savings is lower than desirable”, the RBI hopes that a better harvest and negative output gap will help offset the consequences of the currency depreciation and inflation.

Costlier food items sent wholesale price inflation to a six-month high of 6.1 per cent in August.

Growth trailing

Stating that economic growth has weakened with continuing sluggishness in industrial activity and services, the RBI said the pace of infrastructure project completion is subdued and the start of new projects remains muted.

“Consequently, growth is trailing below potential and the output gap is widening. Some pick-up is expected on account of the brightening prospects for agriculture due to kharif output and the upturn in exports,” it said.

Rajan said concerns on the current account deficit have been mitigated by steps taken by the government and the RBI.

Also, steps have been taken to improve the environment for external financing, turning the focus to internal determinants of the value of the rupee, primarily the fiscal deficit and domestic inflation, he said.

“Further actions need not be announced only on policy dates. However, any further change in the minimum daily maintenance of the CRR is not contemplated,” he added.

NHB caps home loan rates at 10.75% for weaker sections

ET Bureau, 12 Sep 2013

KOLKATA: The National Housing Bank has capped lending rates for specialist mortgage lenders such as LIC Housing Finance which seek refinance from it.

The move comes when interest rates are climbing and the government may have pushed it with an eye on elections as in the case of the Food Bill and accelerated direct cash transfers.

The housing finance regulator has capped lending rates at 10.75% on home loans for the economically weaker sections. This cap is applicable to specialised housing finance companies, while banks will lend at base rate to the targeted segment.

Borrowers with a household income of less than Rs 4 lakh will get the benefit of interest rate ceiling under the government’s dedicated urban and rural housing schemes. NHB said it will provide refinance at a subsidised 8.25-8.75% rate to lenders, so that they earn 200-250-bps interest spread.

Normally, NHB provides refinance at 9.8-10% rate of interest. “The idea behind the interest rate ceiling is to pass on the benefit of concessional funding to ultimate borrowers,” NHB chairman and managing director RV Verma told ET. He said the ceiling was finalised after taking inputs from the government and the Reserve Bank of India.

“Lenders will get good enough spread to give the scheme a fair trial,” Verma said. NHB will send a note to all lenders about this cap later this week. However, lenders will be free to charge any rate if they don’t take refinance from NHB.

“The spread is not enough, taking into account the risk factor attached in funding to economically weaker section,” said DHFL Vysya Housing Finance managing director R Nambirajan. “We will make a request to NHB to increase the spread to at least 3% to cover higher risks,” he said. SBI too may not gain from this move.

State Bank chief wants 100 bps cut in CRR

Mumbai, April 16:  Business Line

A cut in Cash Reserve Ratio will be much more effective in bringing down lending rates than a repo rate cut, said State Bank of India Chairman Pratip Chaudhuri.

A strong votary of abolishing the CRR, the SBI chief said he will bring the base rate down by 20 basis points, if the Reserve Bank of India cuts the CRR by 100 basis points. Base rate is the minimum lending rate below which banks cannot lend.
Policy meeting

The RBI will review key policy rates in its annual policy meeting scheduled on May 3.

Currently, the CRR (the slice of deposits that banks keep with RBI) and the repo rate (the interest rate at which banks borrow short term funds from the RBI) are at 4 per cent and 7.50 per cent, respectively.

“Repo rate has very little or insignificant impact on the cost transmission. The only thing that can significantly bring down the base rate is the CRR. “Looking at the inflation numbers yesterday, I am encouraged to recommend a 1 per cent (100 basis points) reduction in CRR,” Chaudhuri said.

Also, a CRR cut will release more liquidity into the banking system. “The banks will be less desperate for deposits so it (liquidity) will have a more benign impact on the interest rates,” the SBI chief said.
THREE-DAY DEPOSITS

Chaudhuri, who mooted the idea of banks being allowed to introduce ultra-short term deposits of three days maturity, said there will not be any liquidity management issues if such a product is introduced.

Pointing out that absence of such a product is making banks uncompetitive, Chaudhuri reasoned that if banks can take care of seven-day deposits, then they can take care of three-day deposits too.

The SBI chief said that he has explained the new idea to the RBI top brass.

In any case, there is no rule saying that customers cannot withdraw money before the seven-day maturity period, he said. “So, if a seven- day deposit is stable then three-day deposits will also be stable.”

SB deposits

Chaudhuri pointed out that the entire savings bank deposits of banks constitute 25 to 40 per cent of their total deposits and they are with drawable on demand.

Lending rates to remain high in near term: Bankers

24 Mar 2013, PTI.

Borrowers troubled by elevated interest rates will have to wait for a bit longer for relief as bankers have virtually ruled out any immediate cut in the lending rates, citing high cost of funds.

The stance comes even after the Reserve Bank delivered two successive rate cuts of a cumulative 0.50 per cent this year.

“The basic thing that is required – the cost of deposits – is still in the higher side,” Union Bank of India Chairman and Managing Director D Sarkar said, explaining his bank’s inability to cut rates now.

Pratip Choudhary, the chairman of SBI, also said it is impossible for his bank to cut rates in the near term.

Many state-run banks, which generally rely on the costly bulk deposits to shore up their deposit bases unlike their private sector counterpart, which mop up the low-cost savings and current account deposits, have been ratcheting up their term deposit rates for the past few months.

The poor deposit collection problems for the state-run banks were compounded with finance ministry’s directive last year asking them to bring down their bulk deposit ratio to 15 per cent of their total deposits by March 31.

In a move that some experts saw as a sign of a weakness in deposit mobilisation, SBI upped its deposit rate offering by 0.25 per cent last month.

Deposits have grown only about 13 per cent during the fiscal, while credit has grown much faster at close to 17 per cent. In the absence of sufficient deposits, the credit deposit ratios for the banks go up, according to the latest RBI data.

The interest rate scenario has been at an elevated level for over two years now, after the RBI went on a 13 consecutive rate hikes between March 2010 and October 2011 with a view to fight double-digit inflation.

EMI relief for home loan takers in the offing

19 Mar 2013, ET Bureau.

MUMBAI: Home Loan borrowers hoping for lower interest rates may have to wait a little longer. Banks are not likely to pass on the benefits of RBI’s repo rate cut to borrowers this month.

“There is no reason to believe that easing will happen at a rapid pace but it may happen at a measured pace. We expect easing of deposit rates as we enter new fiscal year, and as this happens, the transmission will take place,” said SS Mundra, chairman and managing director, Bank of Baroda.

However, borrowers need not despair. While interest rates are unlikely to be reduced immediately, they can expect relief in the coming weeks. “Since the deposit growth has been muted, interest rates on deposits too have remained high. Therefore, we expect the monetary transmission to take place only after two to three months,” added B A Prabhakar, chairman and managing director, Andhra Bank.

And when banks do cut rates, you will have two options to choose from – reducing your EMIs or the loan tenure. “In such cases, it might be tempting to get your EMI lowered, but refrain from doing so. Getting the tenure shortened should be your priority so that you clear your dues sooner,” says certified financial planner Pankaj Mathpal, CEO, Optima Money Managers. Remember, shorter tenure would mean lower interest burden on your loan.

Allahabad Bank lowers home loan rate by 5 bps to lure high-end customers

13 Mar 2013, ET Bureau.

KOLKATA: State-run Allahabad Bank has lowered interest rate by 5 basis points to 10.25% for housing loans above Rs 30 lakh to attract new customers before the end of this fiscal.

State Bank of India, India’s largest bank, offers home loans above Rs 30 lake at 10.10% rate, while ICICI Bank’s rate for this high-value bracket is 10.5-75% a year. Kolkata-based Uco Bank offers home loan at 10.2% a year.

A senior official in Allahabad Bank said the bank has good demand for loans above Rs 30 lakh of late, while borrowers planning to take a loan less than Rs 25 lakh are deferring their decision to get the benefit of tax breaks announced in the budget.

The bank offers a 50% rebate in home loan processing fee. The government has proposed that a person taking first home loan up to Rs 25 lakh would get an additional Rs 1 lakh deduction of interest over and above the present deduction of Rs 1.5 lakh. To get the benefit, loan needs to be availed in 2013-14 and the value of the property has to be below Rs 40 lakh.

RBI cuts repo rate, CRR by 25 basis points in its Q3 review of monetary policy

29 Jan 2013

NEW DELHI: The Reserve Bank of India (RBI) in its third quarter monetary policy review obliged with a 25 basis point repo rate cut, first repo rate cut in nine months. The repo rate now stands at 7.75%.

The bank also cut the cash reserve ratio by 25 basis points to 4%. The move is meant to infuse Rs 18,000 crore into the banking system.

While repo rate cut will reduce the cost of borrowing for individuals and corporates, the reduction in CRR, which is the portion of deposits that banks have to park with RBI, would improve the availability of funds.

“The stance of monetary policy in this review is intended to provide an appropriate interest rate environment to support growth as inflation risks moderate,” Subbarao said while unveiling the policy review.

The RBI, however, has reduced the growth projections for the current financial year to 5.5 per cent from its earlier estimate of 5.8 per cent. While it is also flagged of the risk of twin deficit on account of widening current account deficit and fiscal deficit amidst a slowdown in the economy.

On inflation, it moderated the rate to 6.8 per cent for March-end from earlier projection of 7.5 per cent.

The central bank’s policy decision is against the backdrop of slowing economy and easing of inflation pressures. However at the same time, with deposit growth in the banking system lagging the credit growth, there could be some obstacle in passing on rate cuts as banks’ face a risk of a squeeze in deposits if they reduce rates further. So far, credit has grown 16.3% year-on-year, which is with the central bank’s comfort zone of 16% for the year. But deposits have grown by 13.3%, way below the central bank’s comfort zone of 15% for the year.

C V R Rajendran, executive director of Bank of Maharashtra said that a cut in lending rates will happen only after deposits rates are lowered.” However at present, lowering deposit is a challenge given that deposit growth is slower than the advances growth. The action taken by large players wills the deciding factor for the industry.”

Though a rate cut should help lower cost of borrowing on the assumption that banks will cut lending rates, there could challenges. For one, borrowing decision for investments depend on a host of other policy factors and the overall investment climate.

For the bond market, which have been plagued with liquidity constraints, the central bank might have done with CRR cuts. Going ahead, dealers expect that the central bank to handle liquidity issues through open market operations or OMOs.

“From hereon we do not expect any more CRR cuts over the next six months the central bank would rely on open market operations.” said A Prasanna, economist at ICCI Securities Primary Dealership.

On the eve of the keenly expected review, the central bank, struck a hawkish tone on the state of fiscal and current account deficits, appearing to throw into question even the much-expected 25-basis-point reduction in rates.

“Given the preponderance of non-monetary factors behind the current slowdown in an environment where risks from high inflation, current account and fiscal deficits still remain, the scope for supportive monetary policy action is constrained,” said RBI’s Macroeconomic and Monetary Developments Third Quarter Review. “As reform actions get executed, monetary policy could increasingly focus on growth revival.”

The central bank’s cautious tone came as Finance Minister P Chidambaram sought to woo investors in Frankfurt with prospects of lower interest rates reviving economic growth as price acceleration is slowing.

The government has made no secret of its desire to see lower rates in the past, and RBI’s reluctance to oblige has been a major point of discord between the two. Last October saw an unprecedented display of irritation by the Finance minister at RBI, which did not cut rates against the government’s wishes.

Source: The Economic Times

Home loans will grow 20% on rate cuts: National Housing Bank

24 Oct 2012, ET Bureau.

MUMBAI: Housing finance regulator National Housing Bank expects a growth of 20% in loans this fiscal, up from 17% in 2011-12, with lenders slashing rates and reducing other charges. Mortgage lending business has become competitive with state-run banks aggressively cutting rates and waiving processing fees, besides doing away with the pre-payment penalty, making it easier for borrowers to switch lenders.

“Some banks are very aggressive in terms of lowering of interest rates,” said NHB chairman and managing director RV Verma. “The lowering of base rates and abolition of some of the fees have made the whole environment competitive and, going forward, we do not rule out further price wars among the banks and HFCs (housing finance companies),” Verma said.

Banks have the benefit of lower cost of funds through strong deposit franchise, while HFCs are constrained by higher cost of funds as they borrow from banks and other sources. Verma, however, said the HFCs can succeed by offering personalised service.

“Despite the slowdown in other sectors of the economy, all geographical locations for that matter, the demand for housing loans has been good and sustained, and we are seeing growth of close to 20% this year for 2012-13 as compared with last year’s 17% between banks and HFCs,” he said. NHB plans to disburse close to Rs 17,000 crore as refinance support to banks and housing finance institutions in 2012-13 against Rs 14,400 crore in 2011-12.

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