Faced with a lull in credit offtake, banks are advancing the rollout of their festival offers.
Festival schemes, which typically include lowering interest rates and waiving processing charges, are announced by banks in the last week of August or early September.
However, this year, some banks rolled out special schemes in early August itself, while others are planning to do so soon.
State Bank of India, for instance, had lowered its interest rates on home and car loans by up to 60 basis points and 50 basis points, respectively, in early August. The bank also lowered the EMI on car loans (seven-year) to Rs 1,699 a lakh from Rs 1,725.
Speaking to newspersons on the sidelines of a banking conclave recently, SBI Chairman Pratip Chaudhuri said, “When our car loan EMI per lakh was Rs 1,766 we were financing 400 cars, when it dropped to Rs 1,725 it increased to 700 cars and when it came down to Rs 1,699 it went up to 1,200.”
Union Bank of India has waived processing charges on home loans between August 15 and January 26. “Our festival offers are rolled out usually during Diwali, but this year we have already rolled out a scheme coinciding with Independence Day,” said D. Sarkar, Chairman and Managing Director.
R. K. Bansal, Executive Director, IDBI Bank, however, said that these schemes need not necessarily be considered as festival offerings as banks are launching various schemes to ensure that their funds earn a reasonable return.
State Bank of Bikaner and Jaipur has also slashed interest rates on home and car loans. “Our deposit growth is more than the credit growth so we have advanced our festival bonanza,” said Shiva Kumar, Managing Director of the bank.
Indian Bank is working on a proposal to make its retail credit cheaper and expedite the sanctioning process, said its Chairman and Managing Director, T. M. Bhasin.
“We are looking at various options, including reducing interest rates and launching specific schemes for affordable instalments. We usually roll out our festival offers by early October but this year we are advancing it by a month,” Bhasin said.