Banks launch offers to attract customers and stimulate credit growth in a bullish rate cycle

With the onset of the holiday season, several public and private sector lenders have rolled out new offers and discounts to entice customers at a time of rising interest rates in the financial system. These offerings aim to help banks boost their credit growth. Bank credit increased by 16.4% to Rs 126.3 lakh crore in the fortnight ended September 23, 2022.

Banks like State Bank of India, HDFC Bank, ICICI Bank, Punjab National Banks are offering reduced interest rates and waived processing fees on home and car loans. Some lenders also offer discounts and cash back on purchases using internet banking, mobile banking, credit and debit cards.

This comes at a time when monthly equivalent installments (EMI) have been rising as the Reserve Bank of India (RBI) resorts to a series of rate hikes to contain inflation. The repo rate, the rate at which the RBI lends money to banks to meet their short-term funding needs, has been raised by 190 basis points since May this year.

The country’s largest lender, the State Bank of India, is offering concessions of up to 0.25% on home loans, 0.15% on top-up loans and 0.30% on home loans. The bank said the interest rate for buyers of new home loans as well as buyouts will now start at 8.4% and top-up loans for furnishings, renovations or home renovations will start at 8.8. %. In addition, the lender has waived application fees on home loans until January 31, 2023

“As we enter the festive season after a long period of muted celebrations due to Covid restrictions, our offers this festive season aim to provide much-needed support to potential homebuyers as they embark on their journey to home ownership,” said Alok Kumar. Choudhary, Managing Director (Retail Banking and Operations), SBI.

SBI said its assets under management (AUM) in the home loans segment exceeded Rs 6 lakh crore.

Mortgage lender HDFC Ltd is offering a festive offer on home loans at 8.4%. Its home loan rates, prior to this offer, were between 8.6% and 9%, depending on the amount of the loan and the borrower’s credit score. As part of the festive special offer, the real estate financier is only offering one rate of 8.4% to borrowers with a credit score of 750 and above, regardless of the loan amount.

Last month, private sector lender HDFC Bank announced festive offers on accounts, loans, cards and equivalent monthly payments. Offers will be available at online, offline, national, regional and hyperlocal merchants spanning a wide range of categories including electronics, jewelry, travel, home decor, apparel, groceries, personal loans and professional and utility vehicles.

The bank offers personal loans up to Rs 40 lakh in 10 seconds at an interest rate starting from 10.50%. Customers can also avail an unsecured business loan with 50% off processing fees. It removed the processing fee on gold loans by 50%.

ICICI Bank has also launched a festive bargain in which it offers a wide range of offers to its customers. Customers can get rebates and cash back up to Rs 25,000 using the bank’s credit/debit cards, internet banking, consumer credit and cardless EMI. Earlier this month, the Punjab National Bank, in a tweet, said it had completely waived processing and documentation fees on car and home loans.

As part of its festive offer, the state-run Union Bank of India is offering home loans from 8.25% and car loans from 8.4%. It also waived processing fees on auto and home loans. The offer will be available for customers until November 11, 2022, according to the information mentioned on the bank’s website. The lender also offers discounts to customers for transactions made on Bookmyshow, MakeMyTrip, Zomato, Swiggy and Goibibo.

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