UCO Bank likely to cut home loan rate by 50 bps

New Delhi: After Finance Minister P Chidambaram urged banks to cut home loan rates, UCO Bank is the first one to respond to the FM's plea.

The Bank is likely to cut rates by 50 basis points. The decision will be finalised when the bank reviews home loan rates on March 15.

Goel says the cut would apply to home loans across all time-periods. The Bank currently charges home loans ranging between 9.5 per cent –12 per cent.

A fortnight ago, the bank had slashed home loans across all tenures by up to 50 basis points.

On Thursday Chidambaram had said as there was a public demand to slash home loan rates, especially for loans up to Rs 20 lakh, banks should take a call.

The HDFC bank set the ball rolling by bringing 25 basis points cut in its retail prime-lending rate to 13.75 per cent with effect from February 1. This has put pressure on other lenders too.

The State Bank of India, currently, charges between 10-11.5 per cent for loans up to Rs 20 lakh.

Loans up to Rs 20 lakh constitute nearly 80 per cent of the total housing loan portfolio.

The RBI in its monetary policy review had kept all policy rates intact, but had advised banks to reduce their net interest margins, following which a number of banks including market leader SBI cut interest rates.

The RBI, Chidambaram said, tries to maintain growth with reasonable price stability.

Responding to the demand of industry that financial institutions should provide liberal loans for purchasing consumer goods, the Finance Minister said, "We are pushing banks to give loans to retail consumers".

In addition to banks, he added non-banking finance companies also provide consumer loans.

He said during his meeting with industry and bankers, some corporates had complained that PSU banks were charging as high as 22-24 interest on consumer loans. "I have asked for the proof, but nobody has produced any evidence," he added.