Click to play videoNew Delhi: It took some nudging by the Finance Ministry, but Pranab Mukherjee's welcome gift to the aam admi is here – public sector banks have agreed to cut lending rates by 1 to 1.5 per cent over the next two weeks.
After the rate cut is done the Finance Minister will meet the PSU banks heads.
“In Bank of Baroda we cut down our PLR by 50 basic points affective from April 1. Deposits rates have also come down in the last month. Going forward we think strongly that there could be a downward vibe as per the lending rates are concerned,” Chairman of Bank of Baroda MD Mallya said.
While Chairman of SBI OP Bhatt said, “I think that the interest rates would not rise in the near future. It could fall but I can't tell you that when and how much would it fall.”
So expect your EMIs to go down.
If you have a Rs 20-lakh loan for 20 years at 9.25 per cent from Bank of Baroda or State Bank of India, you are paying an installment of Rs 18,317. After 1 per cent rate cut you will save over Rs 1,200 and if they cut rates by 1.5 per cent then your EMI will go down by about Rs 2000.
Sadly, the rate cut is just by PSU banks for now as private banks are yet to take a call.
Most PSU banks are reporting higher credit off take, they also claim that their cost of funds are low enough for them to pass on this rate cut.
This fresh round of rate cuts will put the public banks at an advantage as they can now wean away customers from private banks.
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