Following the footsteps of the country’s largest lender State Bank of India, Punjab National Bank on Saturday announced a 50 basis point (0.5 percentage point) reduction in car loans.
The new rates, applicable for new customers, takes immediate effect but are still below those of SBI.
With this reduction, interest rate on auto loans will be between 10.50 per cent and 11.00 per cent as against 11.00 per cent and 11.50 per cent.
SBI has already announced a freeze on car loans at 10 per cent for one year.
Several other banks may follow suit. Bank of Baroda said that it was studying the dynamics of the economic situation. “We will take a call after assessing the situation,” said M.D. Mallya, chairman and managing director.
BoB has agreements with car maker Maruti Suzuki and truck maker Ashok Leyland to facilitate loans. With Ashok Leyland, it has signed a deal to extend loans without collaterals.
The auto industry has been one of the worst affected in the last few months due to the economic slowdown. The drop in rates is expected to boost sagging sales in the auto industry.