Here's a good news for home buyers in India. Soon, they will find it more affordable to invest in property as several banks have announced substantial cuts in their lending rates. This follows a remarkable rise in the cash deposits after the Central government banned the currency notes of higher denominations on November 8, 2016. Data show that between November 11 and December 9, deposits grew from 11.7 per cent to 15.9 per cent.
In hs address to the nation on the New Year’s Eve, Prime Minister Narendra Modi had urged banks to use this opportunity to help the lower middle-class and under-privileged sections.
Banks have wasted no time in following the directive.
From the previous 8.9 per cent to eight per cent now, the country’s largest bank, State Bank of India (SBI), on January 1 announced a reduction of 90 basis points in its marginal cost-based lending rates (MCLR) for one year tenure.
MCLR is the benchmark lending rate at which banks price their loans. The new lending benchmark came into effect from April 1 last year, and has replaced the base rate system.
Similarly, Punjab National Bank (PNB) has slashed rates by 70 basis points — from 9.15 per cent to 8.45 percent.
Another state lender Union Bank of India has implemented a 65-basis points rate cut. The rates, at which the bank will be lending now, stand at 8.65 per cent.
Private lender, ICICI Bank, has also reduced rates by 45 basis points — from 9.1 per cent to 8.65 per cent.
IDBI Bank has, on the other hand, reduced lending rates by 15 basis points and the would be extending new loans at an interest rate of 9.15 per cent.
While all fresh loans will be issued based on revised rates, existing borrowers will have to get their loans reviewed to avail of the benefits.
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