New Delhi: UCO Bank is likely to bring down loan rates by 50 basis points. The state-owned bank is scheduled to take a final decision on the proposal at a board meeting on March 15. It is not clear whether lower rates will be offered for home loans under Rs 20 lakh. The government had said that it is in favour of lower interest rates for home loans under Rs 20 lakh to meet demand. These loans constitute 80% of the advances classified under priority sector.
Smaller loans have less risk weight than those above Rs 20 lakh and, therefore, bankers have incentives to lend to these borrowers at lower interest rates. Several banks, including SBI, Canara Bank, Allahabad Bank and HDFC, have reduced lending rates by 25-50 basis points. The largest private bank, ICICI Bank, has said there could be softening of rates in the first quarter of the next fiscal. SBI charges 10%-11.5% for loans up to Rs 20 lakh. Mr Chidambaram''s recent call for softer interest rates could mean further lowering of interest rates in the home loan segment.
Smaller loans have less risk weight than those above Rs 20 lakh and, therefore, bankers have incentives to lend to these borrowers at lower interest rates. Several banks, including SBI, Canara Bank, Allahabad Bank and HDFC, have reduced lending rates by 25-50 basis points. The largest private bank, ICICI Bank, has said there could be softening of rates in the first quarter of the next fiscal. SBI charges 10%-11.5% for loans up to Rs 20 lakh. Mr Chidambaram''s recent call for softer interest rates could mean further lowering of interest rates in the home loan segment.
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