Banks are likely to take a decision on a cut of up to one per cent in auto loan rates up during next week.
Leading private sector banks like HDFC, Axis Bank will review the extent to which they could lower their interest rates following the series of rate cuts announced by the Reserve Bank of India.
However, ICICI bank, one of the major players in vehicle loans is yet to take any decision.
�We are assessing the deposit to loan ratio and the overall impact of making auto loans rates cheaper. By next week we should be able to take a decision,� Mr Rajan Pental, Senior Vice-President, Auto loans, HDFC Bank, told Business Line.
�We do see a cut in interest rate on car loans between 50 basis points and 100 basis points. While in cars the cut would be implemented immediately, in case of commercial vehicles, it could be with effect from January,� said Mr S.V. Parthasarathy, Executive Vice-President, Consumer Banking Division, IndusInd Bank.
At present, the interest rate is varying in the range of 13-15 per cent for private banks. This is around 2 percentage points lower than their prime lending rate � the best rate at which they lend to their most credit worthy corporate borrowers.
Axis Bank too confirmed that its asset and liability division was meeting next week to review the rates.
�We will meet next week on slashing interest rate on car loans. Auto companies are already giving huge discounts which are reducing the cost for the customers. But we will consider how much we can lower the rates,� said a top official from Axis Bank.
Since the last few weeks, auto makers have been contending that banks were not lowering interest rate despite the measures taken by the RBI to ensure increased flow of money supply in the system. Vehicle producers are hoping that a cut in interest rate would spur demand and help them boost sales.
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