With festival season around the corner, banks have started offering lower interest rates on many of their loan products to boost demand. Some banks have also changed deposit rates to attract customers. Here is a roundup of the latest interest rate cuts and deposit rate changes by leading banks in the country.
Changes in interest rates on retail loans:
[table id=35 /]
It is seen that a majority of banks have reduced interest rates on retail loans during the festival season in order to encourage loan offtake. Most offers are for new customers, meaning existing customers do not stand to gain from these reductions. Also, as a new customer if you wish to avail any of these festival offers by banks, you must read the fine print of the loan offer carefully. Look for any hidden charges or conditions in the loan. For instance, the lower interest rate on the loan will be valid only for a limited time period. Also, remember to compare the market rates of similar products across banks. It is not necessary that a festival loan offer is cheaper than another product by a competitor bank which is not covered by a festival offer. A thorough comparison of options will help you choose the most cost effective one.
Changes in interest rates on deposits:
[table id=36 /]An increase or decrease in deposit rates depends on the banks’ perception of the market rates and liquidity for the respective duration. It also depends on the interest rate charged by the bank for loans of that particular duration bucket. For instance, SBI lowered the deposit rate for duration of 1-3 years, but increased the rates for duration of 180 days to 210 days. This could mean that the bank experienced high liquidity and poor credit offtake for the duration in which it lowered the deposit rate. There can be other reasons too. Customers should not blindly opt for the duration in which banks increase the deposit rate. The investments should be in line with goals and investment tenure needed to meet the goals.