PNB, Oriental Bank cut rates on car, consumer goods loans

Within days of government promising more funds to PSU banks, two leading state-owned lenders Punjab National Bank (PNB) and Oriental Bank of Commerce (OBC) today cut interest rate on auto and consumer durable loans by up to 2.50 per cent to cash in on festive demand.

Rate of interest on car loans has been reduced by over a per cent to 10.65 per cent on fixed basis, PNB said in a statement.

Similarly for two-wheelers, the interest rate has been slashed to 12.25 per cent while rate of interest on personal loans for purchase of consumer durables has been brought down to 12.75 per cent on fixed basis.

These rates are lesser by 1 per cent to 2.50 per cent from the existing floating rates, it said.

Besides, it said, there will be full waiver of upfront fee and documentation charges. In case of car loan, the bank will finance to the extent of 100 per cent of ex-showroom price of car.

The festival offer is valid up to January 31. According to OBC, interest rate on commercial financing of four wheelers (Auto & Taxis) has been reduced to 12 per cent from 12.25 per cent.

Similarly, personal loans and consumer durable loans has been reduced by 0.25 per cent to 12.50 per cent for government employees while for other employees it has been brought down to 13.50 per cent.

The new rates would be effective from October 10, OBC said in a statement.

On home loan, PNB said, the bank has waived of upfront fee and documentation charges. However, the interest rates on home loan have been left unchanged.

Loan up to Rs 5 lakh for purchase of consumer durables and furnishing of the existing fully constructed house at fixed rate of interest of 10.50 per cent, it added.
 
Last week, the government had decided to provide additional funds to the PSU banks to enable them extend more credit to auto and consumer durables sectors to stimulate demand and combat slowdown.

The decision to increase the quantum of capital infusion was taken at a meeting between Finance Minister P Chidambaram, RBI Governor Raghuram Rajan and Economic Affairs Secretary Arvind Mayaram.
     
"This amount (Rs 14,000 crore provided for capital infusion in Budget) will be enhanced sufficiently. The
additional amount of capital will be provided to banks to enable them to lend to borrowers in selected sectors such as two-wheeler, consumer durables, etc at lower rates in order to stimulate demand," a finance ministry statement had said.

The additional fund infusion would help in combating slowdown and boost output, it had added.