Canara, Allahabad banks slash home loan rates

State-controlled Canara Bank and Allahabad Bank cut the lending rates by 0.25 percentage points and 0.5 to 0.75 percentage points respectively, reports BS Srinivasalu Reddy.

While ICICI, the leader among private banks in home loans, is yet to decide on lending rate cuts after market pioneer HDFC did so last week, two other banks on Tuesday slashed their rates for both home and personal loans.

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State-controlled Canara Bank and Allahabad Bank cut the lending rates by 0.25 percentage points and 0.5 to 0.75 percentage points respectively on Tuesday, days after HDFC cut its lending rates by 0.25 percentage points.

HDFC broke the mould, taking the signals from the Reserve Bank of India Governor YV Reddy in the credit policy on January 29, paving the way for other banks to follow.

Canara Bank, the third largest bank in the country, slashed the home loan rates by 0.25 per cent almost across the board. Now, the bank’s home loan below Rs 20 lakh for five years is priced at 10 per cent and a long-end loan for 25 years will cost 10.5 per cent per annum.

“The decision is in line with the expected softening of interest rates. However, a cut in rates of other loans will be considered later," Canara Bank chairman MBN Rao told Hindustan Times. Though the corporate sector is growing at a robust pace, credit growth is not expected to cross the Reserve Bank-targeted level of 24 per cent. This move will encourage small industries and households to seek loans.

Speaking to reporters at a conference ICICI Bank's chief executive officer KV Kamath said that the bank was watching the interest rates trends, which usually go up during the last quarter, before taking a decision on a possible cut.