Banking Sector

RBI Rate Increase Turns Car Loans Pricey

Reserve Bank of IndiaWith RBI rates increase, car loan providers have raised interest rates by 75 to 100 basis points. The enhancement would mean a monthly increase of Rs 50 for a five-year loan having a daily rest basis.

ICICI Bank’s direct selling agents (DSAs) said they have accepted an official report from the bank on the cost increase effective from Monday. Rack rates are inclusive of DSA commissions.

The officials stated, “We used to lend at rack rates of 15% per annum, we are now been told that the new rates will be 16% effective from Monday.”

HDFC Hikes Lending Rates

HDFC BankIndia’s largest house finance banking company HDFC has announced raised lending rates by 75 basis points for new loan seekers, and on the other hand, the interest rate is up 50 bps for the existing customers.

The 50 bps hike will translate into a Rs 32 hike each month on a loan of Rs 1 lakh borrowed for 20 years. Yet HDFC’s after hike rates are cheaper than its nearest rival ICICI Bank which annunciated a rate hike last Week. Last week, ICICI Bank increased its benchmark advance rate to 15.75%, while Yes Bank hiked its PLR to 14.75%. However, the state-owned banks are yet to consider their lending rates.

SBI Jacks Up Personal & Car Loans

State bank of IndiaThe State bank of India announced on Wednesday that there’s going to be a small rise in rates for car loans and personal loans.

The MD of SBI said: “we have announced like in benchmark prime lending rates by 75basis points…Consequently, we will be raising rates by 75 basis points on an average.” Mr. Aggarwal added, “This interest rate cycle has peaked in economy and the rates are likely to stabilize at this level.”

SBI is going to raise interest rates in some schemes. SBI had also announced 0.75 % in its benchmark prime lending rate to 12.25% last month.

Indians Go For Credit Cards Rather Than Debit Cards

Credit CardsThe credit card market is emerging at a rapid velocity in India. The RBI’s latest monthly report reveals that approximately, one-fifth of the total retail electronic payments is being conceded through credit cards, whereas, debit cards’ share is just 4%.

The Metro cities like Delhi and Mumbai are highly penetrated by credit cards. The credit card issuers found excellent business prospects in Kolkata, Bangalore, and Hyderabad as well because of their IT/ITeS groups. With increase in the number of commercial activities and the growing swanky malls in smaller cities give bankers another target for their credit card market.

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