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Remya Nair

Mumbai, Oct. 18 Despite banks talking about acute fund crunch, some of them are offering festive discounts on loan products.

The Mangalore-based Corporation Bank has announced 0.25 percentage point reduction in interest rates on home and vehicle loans from October 17 to November 15, 2008. This ‘Festive Bonanza’ will be available only for fresh loans availed during the period.

“The scheme is to provide incentives to people who are serious buyers during this festive season. Many of our customers wait for these kinds of festive schemes. As we have had a good response to such schemes last year, we are hopeful of the same this year,” said a Corporation Bank official.

Punjab National Bank, another leading PSU bank, also reduced the floating rate of interest on housing and educational loans for the existing as well as prospective borrowers by 0.50 percentage points. The bank has also reduced the rate of fixed rate housing loans and car loans for the prospective borrowers by 0.50 percentage points.

“This measure has been taken to ensure credit to the borrowers at a lower rate during the festival season,” the bank said in a statement.

Until recently, banks were non-committal about their plans to offer discounts or special offers given the liquidity crunch in the banking system. However, the situation seems to have changed with the Reserve Bank of India cutting CRR rates by 250 basis points and releasing Rs 1,00,000 crore into the system. Besides this, banks have also got the first instalment of the farm loan waiver, which injected Rs 25,000 crore into the system. This has prompted some banks to pass on the benefit to their customers.

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