maharashtra bank: maharashtra bank cuts home and auto loans but expects lesser impact on NIM
The Pune-headquartered BoM cut home loan rates by 40 basis points to 6.4% from 6.8% previously and car loan rates by 25 basis points to 6.8% from 7.05%. Those fine rates will be available to customers with the best credit ratings from Dec. 13, the bank said.
A basis point is one hundredth of a percentage point. SBI offers home loans at a minimum of 6.7% per annum and car loans at 7.25%. HDFC’s festive rate on home loans also starts at 6.7%.
“The rate cut is aimed at increasing demand and increasing our credit-to-deposit ratio,” BoM chief executive AS Rajeev told ET.
“The current reduction may not impact the net interest margin (NIM) as the increase in credit will generate more net interest income (NII). This is mainly due to the shift from investments to credit, this quality credit also because of the higher Cibil rating,” he said. said, expecting a sobering impact on the cost of credit in the future.
The BoM was among a handful of lenders that reported an increase in the NII as well as the NIM for the second quarter ending September compared to the same period last year, while most public sector lenders reported witnessed a drop in these ratios following the pre-holiday lending rate cuts. season.
Its NIM was 3.27% for the second quarter compared to 2.57% a year ago.
Rajeev said there would be no immediate change in deposit rates. He said rates have bottomed and could continue to hover around that level this fiscal year with a maximum upside move of 25 basis points.
With the latest rate cuts, the bank expects home loans to grow at a rate of 25%, better than the 20% growth it is currently seeing.
“We offer one of the lowest interest rates for personal loans, especially for home and auto loans in the industry,” said executive director Hemant Tamta.