If you are one of those postponing your festive shopping waiting for lucrative discount offers from banks, chances are there that you may end up with a huge disappointment. Banks and financial companies known to offer various discounts schemes during the festive season especially around Diwali are disappointing many, this season. Banks which have already announced festive discount schemes are keeping the whole discount process a hush-hush and low key affair to keep in tab with the possible troubles from Reserve Bank of India.
The premier banking agency, RBI had been questioning the motive behind such festive special offers and how banks can manage a cheaper interest rate when the cost of funding has not changed. Banks are however walking a tight rope as they understand the need to push festive discount offers to attract clients from their rivals in order to maintain a favorable public image for the common man.
Banks Struggling with Low Net Interest Margins:
Banks are facing a financial crunch with the regular decline of yield on advances leading to a drop in their net interest margin. The drop in overall profitability of banks has also meant that banks have been forced to cut interest rates on fixed deposit accounts for various tenure periods. State Bank of India, the country’s largest public sector bank has already announced two rate cuts for various fixed deposit interest rates while other banks are likely to follow suit dampening the spirit of the holiday season for the common investor.
Discounts a Low Key Affair:
Since RBI has expressed concern over massive advertisement of such discount schemes in the festive season, banks are keeping their festive discount offers a low key affair. Most private sector banks have decided not to offer such festive discounts this year to avoid facing any unnecessary concerns from the Reserve Bank of India.
Popular Festive Discount Schemes for the Common Man: While a number of private banks have totally shied away from offering any festive discount schemes this season others including State Bank of India, Punjab National Bank and HDFC have reduced the home loan interest rates. Grand Festival Dhamaka scheme introduced by Corporation Bank is offering auto loans under its special scheme known as ‘Corp Vehicle Scheme’ while Sundaram BNP Paribas has come with a special festive offer. Sundaram BNP Paribas is offering a new scheme for funding rural houses at a concessional rate.
Axis bank which initially announced possible festive discount scheme for car loans later preferred to remain silent.
Public Sector banks on the other hand which have been offering such festive discounts from a long time are also making sure that no excessive advertising is done and all such discounted schemes are made aware to consumers through word of mouth publicity alone. SBI, Corporation Bank and PNB has published festival schemes in their site, but very little or advts given for the same. Rather than creating much difference in interest rates, Corporation Bank and PNB preferred to waive off processing fees to attract buyers.
Since Indian consumers use the festive season to make a lot of purchases considering it to be an auspicious time, banks are pinning hopes on the festive season to boost sales albeit keeping the discount offers subdued.
Banks look at Other Ways to Attract Clients:
Instead of going the traditional way of offering festive discount schemes on loans by lowering the applicable interest rate, banks are looking at other ways to offer some festive discounts to the clients. Better tie ups for credit card reward points, waiver of processing fee for new card and loan applications and other discounts on co-branded cards are some of the unique ways being explored by the banks offer a limited festive season bonanza to its clients.