Private sector lender HDFC Bank has decided to slash auto loan rates by up to 0.5 per cent, a day after the Reserve Bank of India cut its policy rates.
The interest rate on car loans will be lowered by 0.25 per cent while two-wheeler loans will be cheaper by 0.5 per cent, a senior bank official confirmed. Commercial vehicle loans will be cheaper by 0.25 per cent.
The new rates would be effective from February 1, the official added.
Last month, HDFC bank had reduced its base rate by 0.1 per cent to 9.7 per cent, the lowest in the market. At the same time, the benchmark prime lending rate (BPLR) of the bank was also slashed by a similar margin to 18.20 per cent.
The revision in the benchmark lending rate was in anticipation of rate cut by the central bank in its January policy.
On Tuesday, the RBI decided to reduce short-term lending rate by 0.25 per cent and slashed the Cash Reserve Bank (CRR) by the same margin to inject Rs 18,000 crore of liquidity into the system.
Following the announcement by RBI, IDBI Bank reduced both its deposit and lending rates by 0.25 per cent. Other banks including State Bank of India (SBI) hinted at cutting their interest rates within the next few days.
Mumbai-based HDFC Bank currently offers car loans between 10.75 per cent and 11.75 per cent. Post rate cut, the range would be 10.5-11.5 per cent for repayment period between 36 and 60 months. Accordingly, interest rate on two-wheeler loans would be adjusted to 19.25 per cent - 22.25 per cent.
For heavy commercial vehicles, the rates will come down by 0.25 per cent to 11 per cent while loans for light commercial vehicles will be available at 13.75 per cent from existing 14 per cent.
The auto loan portfolio of the HDFC Bank currently stands at about Rs 33,000 crore. The auto loan advances of the bank have been witnessing a growth of 12 per cent.