Customers sitting on the fence to bag attractive financing options for purchasing homes or vehicles during the festival season might be in for a disappointment. Most banks are either delaying their decisions to announce special schemes for festive season due to uncertainty over interest rates or have decided against offering interest subsidy on such schemes.

Moreover, banks that are planning to offer rebate are ready to do so only for select category of customers. The fear of defaults in a high-interest regime is a concern and might discourage banks to boost their advances by lowering rates for a temporary period, senior bankers feel.

Mr R K Bansal, Executive Director, IDBI Bank, said, “It looks unlikely that banks will come out with special offers this year due to the present economic conditions. We have not decided on it so far.”

Though banks might prefer not to offer interest rate subsidy, however, they could announce offers relating to reduction in service charges and waiver of prepayment penalty, said Mr Kamlesh Rao, Executive Vice-President (Personal Finance and Mortgages), Kotak Mahindra Bank.

Typically most banks announce their schemes between the third-fourth week of August and first week of September. “We are waiting for a clear picture on inflation and interest rates to emerge before taking a call,” said Mr K. R. Kamath, Chairman and Managing Director, Punjab National Bank.

United Bank of India anticipates another round of rate hike due to inflation. The bank will take a call on festive offers around the second week of September, its Executive Director, Mr S L Bansal said.

“There is a pressure on interest rates and given the kind of competition, banks might find it difficult to offer lower rates,” said Mr S. K. Chakrabarti, Deputy Managing Director, Axis Bank. As a policy, the Axis Bank does not offer discounted rates in festive season.

ICICI Bank on Thursday launched a fixed-cum-floating rate product for home loans.

Allahabad Bank has also announced its festive scheme by offering 1-1.5 per cent interest rebate on various retail loans. The offer, however, will be valid to select customers.

“These loans will be given to salary accountholders or will be linked to the cash flows of an individual,” said the Chairman and Managing Director, Mr J. P. Dua.

Related Topics