NEWS & ADVICE : CAR LOANS
Season for teaser loans evanishes for ICICI, HDFC and Kotak Mahindra Bank
By Vaibhav Aggarwal
Mar 5, 2010
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Even though the RBI has not raised its policy rates yet, banks like ICICI, HDFC and Kotak Mahindra seem to be proactive. They have already raised rates on home loan and auto loan.

Other commercial banks like Axis Bank Ltd, Union Bank of India, Canara Bank, Punjab National Bank, Bank of India and IDBI Bank Ltd have already discontinues their teaser rate regime after the RBI announced a hike in capital reserve ratio (CRR) by 75 basis points.

These banks have raised their lending by 100 basis points, following stiffening of the market, as RBI has started withdrawing liquidity surplus stimulus.

"Auto loan rates have been marginally increased by 50 bps," said Pralay Mondal, country head (retail assets & credit cards), HDFC Bank.

"The increase in the cost of funds is being passed on to customers. It has been done to protect our margins."

"Auto loan rates have been raised by 0.25-0.5% depending on segment and tenure with effect from 5 March," an ICICI Bank spokesman said.

The banks had earlier resorted to a hike in deposit rates following RBI's strict policy rate maneuver.

"The hike in rates comes after most of the banks raised their deposit rates by 75 to 100 basis points. We have just realigned the lending rates to deposit rates," said Kamlesh Rao, executive vice-president at Kotak Mahindra Bank.

Many bankers have quoted that the rates may rise further following the release of monetary policy in April 2010 wherein the RBI is expected to increase the policy rates as a step to curb inflation.

 


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