A slew of banks have offered lower auto and home loan rates ahead of this festive season but amidst the concern of rising inflation, further cuts in the rates are unlikely. Mr. D. Subbarao, RBI's governor is worried about inflation and its impact on rates.
Vijaya bank's chairman, Albert tauro said that many banks including Vijaya bank have slashed interest rates on products like auto loans and home loans but this decrease in rates is a limited period offer, till 15th January, in the case of the bank. He said . "Going forward beyond this festive season we will take a fresh call depending on the environment at that stage. So overall interest rate scenario is not showing any firm indication of coming down probably, it is in a range now and it will remain in a range for quite sometime." The next cue, he added will only after all government borrowing come to a close and it might depend on the next policy announcement in October.
Recently, C Rangarajan, EAC in the Prime Minister's office expressed a similar view. On the sidelines of an international conference on ‘Global Economic Meltdown: Challenges and prospects', he said that with the greenshoots of recovery in the global economy, the interest rates were likely to increase.
"There is growth already seen in auto and home loans...In the latter part of this fiscal, I expect that project finances will also pick up...We will continue to focus on home, auto and infrastructure loan segments," said Chanda kochhar,ICICI Bank's Managing Director and CEO.