In a major relief to auto-loan seekers, the country's second largest private sector lender, HDFC Bank, has decided to slash interest rates on personal and commercial vehicles by up to 150 basis points from Monday.
In addition, the bank will also cut interest rates on corporate loans and wholesale credit, a move that will benefit small and medium enterprises and large companies.
Car and commercial vehicle loans will become cheaper by 125 basis points, while interest on two-wheeler loans will be reduced by 150 basis points, HDFC Bank Head (Retail assets and credit cards) Pralay Mondal told PTI.
At the same time, the bank will reduce interest rate on personal loan by 75-100 basis points, from existing 17-17.5 per cent.
"We have been able to pass on such a massive reduction to customer as cost of fund has eased and it is slated to come down further in the coming months," he said.
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, he added.
The auto sector has been under the tight grip of slowdown for the past two months. In December, the overall domestic auto sales declined 18.2 per cent as commercial vehicles and two-wheeler sales crashed heavily.
Across the board massive rate cut by the bank comes in less than 20 days of reduction in its prime lending rate by half a percentage point.
The bank, which is the largest financier of retail loan, currently offers car loan at 13.5-14 per cent, commercial vehicle loans at 14.5-15 per cent, while credit for two wheelers attracts interest rate at 24-24.5 per cent.