Calcutta, Feb. 5: Two public sector banks, Canara Bank and Allahabad Bank, today lowered their lending rates. While Canara Banks cut takes effect on February 7, Allahabad Bank will reduce rates from February 10.
On January 31, Housing Development Finance Corporation Ltd (HDFC) reduced its lending rates by 25 basis points. While HDFC was the first to cut home loan rates, Allahabad Bank took the lead in lowering all retail lending rates, including home loans. It has cut interest rates on term deposits of two years or more.
Allahabad Bank has slashed its lending rates by 50-10 basis points on home, consumer durable, car financing and education loans.
However, the reduction will be applicable only to new loans and existing borrowers will not get the benefit of the new rates.
The decision to cut rates has been taken keeping in mind the reduction in the cost of incremental funds, falling yield in government securities and overall market scenario, the bank stated in a release.
In housing, interest rates have been reduced by 50 to 75 basis points across all tenures. Interest rates on car loans and consumer durables have been cut by 100 basis points. Education loans, too, have been made cheaper by 25 to 100 basis points, the release added.
Bangalore-based Canara Bank has reduced its interest rates on housing loans by 25 basis points. Both existing as well as new borrowers can avail themselves of the new rates. However, the lower rates will be applicable only to loans in the floating category.
At present, the bank charges 10.75 per cent for home loans up to Rs 20 lakh and 11 per cent for loans above Rs 20 lakh for a maximum period of 20 years. The new rates will be 10.50 per cent and 10.75 per cent, respectively.