A day after the Reserve Bank of India cut the repo rate and cash reserve ratio, HDFC Bank on Wednesday decided to lower interest rates on auto loans by up to 50 basis points (bps).
Federal Bank also reduced its car loan rates to 10.45%, compared with 11.2% rate of interest charged on three-year car loans earlier. This is the lowest interest being charged on auto loans, among banks.
According to sources, HDFC Bank has cut the interest rate on four-wheeler loans by 25 bps, now priced between 10.5-11.5%, while two-wheeler loans will be cheaper by 50 bps and will be priced between 19.25 and 22.25%. The bank has also decided to cut interest rates on commercial vehicles by 25 bps. After the cut, the bank will charge 11% on heavy commercial vehicles and 13.75% on light commercial vehicles.
HDFC Bank’s car loan portfolio as on December 31 stood at R30,041 crore, up 16.6% y-o-y, and two-wheeler portfolio rose 22.4% to R2,943 crore. The bank’s commercial vehicle and commercial equipment portfolio was at R16,371 crore at the end of the third quarter.
After RBI cut repo rate and CRR, Aditya Puri, managing director and chief executive officer of HDFC Bank had said, “There will be monetary transmission by banks.” Puri had also said whether banks will cut their base rate or will reduce lending rates in certain selected pockets will depend on each bank.
In December, the private sector bank had cut its base rate by 10 bps, bringing it down to 9.7%. At the same time, the benchmark prime lending rate (BPLR) was also lowered to 18.20%.
Most banks had agreed that the RBI policy action would be passed on to customers by some reduction in lending rates. State Bank of India and other large lenders have their assets and liabilities committee (ALCO) meetings lined up over the next few days, to take a call on their interest rates.