SBI is India's largest commercial bank in India in terms of assets and has a deposit base of 26.02 lakh crore. The move by the SBI to waive off processing fees is likely to increase competitive pressure on other banks to come up with similar offers. Banks are trying to boost their retail lending at a time when credit offtake by corporates remain weak.
Earlier this month, to ramp up its mortgage book volumes and promote better credit behaviour, Axis Bank launched a home loan product that entails waiving off a few EMIs during the course of a loan.
The third largest private sector lender will waive off four equated monthly instalments (EMIs) each at the end of the fourth, eighth and the 12th year of a two-year loan.
Reduction in saving deposit rates may set the ball rolling for lower lending rates and stoke greater competition among lenders, India Ratings. "With the interest rate cycle reaching the bottom, downward repricing of existing liabilities can facilitate a further reduction in the rates. A few large banks cutting savings deposit rates over the past few weeks is a move in that direction," the agency said in a report.
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