With the festival season on in full swing and buoyed by the Government’s promise of infusing funds worth Rs 14,000 crore in State-owned banks, two leading PSU lenders PNB and Oriental Bank of Commerce (OBC) on Tuesday cut interest rate on auto and consumer durable loans by up to 2.50 per cent to cash in on festive demand.
The move to cut rates by the two public sector banks (PSBs) comes within a week after it was decided to increase the quantum of capital infusion in a meeting between Finance Minister P Chidambaram, RBI Governor Raghuram Rajan and Economic Affairs Secretary Arvind Mayaram.
Rate of interest on car loans has been reduced by over a per cent to 10.65 per cent on fixed basis, PNB said in a statement.
Similarly for two-wheeler, the interest rate has been slashed to 12.25 per cent while rate of interest on personal loans for purchase of consumer durables has been brought down to 12.75 per cent on fixed basis.
These rates are lesser by 1 per cent to 2.50 per cent from the existing floating rates, it said. Besides, it said, there will be full waiver of upfront fee and documentation charges. In case of car loan, the bank will finance to the extent of 100 per cent of ex-showroom price of car.The festival offer is valid upto January 31.
According to OBC, interest rate on commercial financing of four wheelers (Auto & Taxis) has been reduced to 12 per cent from 12.25 per cent.
Similarly, personal loans and consumer durable loans has been reduced by 0.25 per cent to 12.50 per cent for government employees while for other employees it has been brought down to 13.50 per cent. The new rates would be effective from October 10, OBC said in a statement.
last week, the Government had decided to provide additional funds to the PSU banks to enable them extend more credit to auto and consumer durables sectors to stimulate demand and combat slowdown.