Oriental Bank of Commerce (OBC) today announced a revamp of its home and car loan schemes as part of its efforts to ramp up its retail loan book and increase market share in these segments.
The new home loan scheme includes features such as reduced interest rates, extended repayment terms, higher loan eligibility for high ticket loans besides loyalty bonus of 0.25 per cent concession in interest rates for certain existing customers, Mr S.L.Bansal, Chairman & Managing Director of the bank said. The changes to home loan and car loan schemes came on a day when the bank further cut its base rate from the existing level of 10.65 per cent to 10.50 per cent.
Cut in BPLR
OBC also today reduced its benchmark prime lending rate from 15 per cent to 14.75 percent. As much as 60 per cent of OBC's loan book is linked to base rate. Base rate is the rate below which a bank cannot lend.
Car loans from OBC will now come at bank base rate plus 1 per cent (effectively 11.5 per cent) for repayment period of three years, as against loan rate of 12.65 per cent earlier. For repayment beyond three years, car loan rate is now pegged at bank base rate plus 1.25 per cent (11.75 per cent) as against 13.15 per cent earlier.
With home loan rates linked to base rate, borrowers will stand to gain on the latest reduction in base rate along with the general reduction in home loan rates, it was pointed out.
For instance, home loans up to Rs 30 lakh for a tenor of 15 years will now be available at bank rate itself — 10.5 per cent — for certain loyal captive customers. For normal customers, it will be available at 10.75 per cent. Prior to the latest changes, the same loan would have come at an interest rate of 11.15 per cent.
“We believe our new home loan scheme will help improve demand for home loans. When economy is in a stress, we want to give a boost to retail assets so that home loan demand goes up in a big way”, Mr Bansal said.
To de-risk the balance sheet, OBC aspires to grow its overall retail loan portfolio from the current level of 11 per cent of its total loan book to minimum 15 per cent in next two years, Mr S.C.Sinha, Executive Director said.
Concessions
OBC is now offering a bundle of concessions to its existing savings bank, cash credit customers and home loan and car loan borrowers as part of its efforts to cross-sell products.
“Normally a public sector bank sells 1.5 products to a customer. Our aim is to scale it to 3 products so that cost of our operations will come down. The saving in turn is being passed on to customers”, Mr Bansal said.