HDFC Bank has declared to reduce interest rates on cars and commercial vehicles by up to 150 basis points from February 19.
Even the bank has also decided to cut down interest rates on corporate loans and wholesale credit to facilitate small and medium enterprises and large firms.
HDFC Bank head (retail assets and credit cards), Pralay Mondal said that car and commercial vehicle loans will become cheaper by 125 basis points. The interest on two-wheeler loans will be reduced by 150 basis points.
HDFC will slash interest rate on personal loan by 75-100 basis points from the existing 17-17.5 per cent.
According to Mondal, "We have been able to pass on such a massive reduction to customers as cost of fund has eased and it is slated to come down further in the coming months."
Later on, Mondal has admitted that the bank is doing it as a pre-emptive measure which will give a fillip to the slackening auto sales, in particular, and the SME and manufacturing sector, in general.
The lag has badly hit auto sales. The selling of auto has declined 18.2 per cent in December because of a fall in the sales of commercial vehicles and two-wheelers.
The rate cut by the bank comes in less than 20 days of reduction of its prime lending rate by half a percentage point throughout the country.
Presently HDFC Bank has offered car loan at 13.5-14 per cent and commercial vehicle loans at 14.5-15 per cent. The loan for two-wheelers has offered a 24-24.5 per cent interest rate. Mondal has said that the interest rate on loans against properties would come down sharply by 150-200 basis points and credit against securities would allow the cut of one per cent. The existing rates for such credit vary between 13.75-15.25 per cent.
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