Soon after the Reserve Bank of India slashed its short-term lending rate (repo), mandatory cash requirement of the banks (CRR) and the portion that bank needs to invest with the government bonds (SLR), bankers also started considering a cut in their lending rates.
Public sector IDBI Bank has announced a 50 basis points cut in its home and education loans with effect from November 1st.
A press release by the bank stated that the rate cut would be valid for both its existing as well as new customers. The home loans rates have been revised downwards to11% from 11.5%.
However at the same time, bank has also raised the money margin for home loans. Home loans up to Rs 30 lakh will now check margin money of 20% against 15% earlier where as for loans above Rs 30 lakh this percentage is raised to 25%.
Earlier Punjab National Bank and Union Bank of India had announced a 50 basis points reduction in their home loans. Both the banks have also reduced their benchmark prime lending rate (BPLR) by 50 basis points.
The move by these PSU Banks is expected to be followed by others in the industry.