Finance Minister P. Chidambaram has urged banks to lower the equated monthly installments (EMIs) on various retail loan products such as home loans, car loans, education loans, personal loans etc in his recent meeting with the banks' bosses.
It is reported that the finance minister's advice comes as a measure to tackle economic slowdown. By increasing the growth in retail loans segment, the finance minster hopes to increase the demand for corporate loans as companies will invest to increase their capacity of production of their products and services to meet the increased demand from the consumer.
Public sector bank, Central Bank of India, has already slashed its home loan interest rates by 10 basis points. In other retail loan segments, the bank has cut rates by about 50 to 200 basis points. Recently, the country's largest lender, State Bank of India, had reduced its interest rates on home loans, auto loans and education loans by about 50 basis points. Similarly, an associate of SBI, State Bank of Bikaner and Jaipur, too slashed its interest rates on home, car and education loans segments by about 50 to 75 basis points.
It is reported that other public sector banks such as Punjab National Bank, IDBI Bank and Bank of India could also follow suit and cut their interest rates on retail loans.