The Indian banks are facing acute fund crunch, in spite of that some of the banks are offering festive discounts on loan products.
Recently the Mangalore-based Corporation Bank has reduced interest rates of its home and vehicle loans by 0.25 percentage point from October 17 to
“The scheme is to provide incentives to people who are serious buyers during this festive season. Many of our customers wait for these kinds of festive schemes. As we have had a good response to such schemes last year, we are hopeful of the same this year,” said a Corporation Bank official.
Another PSU bank which has also announced reduction in interest rates is Punjab National Bank. Bank has even reduced the floating rate of interest on housing and educational loans for the existing as well as prospective borrowers by 0.50 percentage points. The bank has also announced reduction in the fixed rate of housing loans and car loans for the prospective borrowers by 0.50 percentage points.
“This measure has been taken to ensure credit to the borrowers at a lower rate during the festival season,” the bank said in a statement.
Due to liquidity crunch in the banking system the banks were not ready to offer discounts or special offers. But the situation appears to have changed after cut in CRR rates by 250 basis points done by the Reserve Bank of India and releasing Rs 1,00,000 crore into the system. Besides this, banks have also got their first installment of the farm loan waiver, which injected Rs 25,000 crore into the system. Therefore this has encouraged some banks to pass on the benefit to their customers.
