HDFC Bank cut rates on personal & commercial vehicles

HDFC country’s second largest private lender has announced a cut in interest rates on personal and commercial vehicles which has come as a big relief for the auto-loan seekers. Bank has slashed interest rates by up to 150 basis points.

Besides bank has also announced cut in interest rates on corporate loans and wholesale credit. With the slash in rates on these loans is going to benefit small and medium enterprises and large companies.

HDFC Bank Head (Retail assets and credit cards) Pralay Mondal pointed out that car loans will get cheaper by 125 basis points, whereas interest on two-wheeler loans has been slashed by 150 basis points.

Simultaneously, the bank will be reducing interest rate on personal loan by 75-100 basis points, from existing 17-17.5 per cent.

He added, "We have been able to pass on such a massive reduction to customer as cost of fund has eased and it is slated to come down further in the coming months".

He further added the bank is taking this measure as a precaution which in turn will stimulate the lull auto sales in particular and the SME and manufacturing sector in general.

For the past two months the auto sector has been facing slowdown in sales. In December, the overall domestic auto sales came down by 18.2 per cent as the sales of commercial vehicles and two-wheeler crashed heavily.

Transversely the announcement of massive rate cut by the bank has come in less than 20 days after the reduction in its prime lending rate by half a percentage point.

The bank, largest financier of retail loan, is at present offering car loan at 13.5-14 per cent, commercial vehicle loans at 14.5-15 per cent, while credit for two wheelers draw interest rate at 24-24.5 per cent.

Besides this, HDFC Bank is determining to slash rates on loan against properties and securities by as much as 200 basis points.

Mondal remarked that the interest rate on loans against properties will be reduced by 150-200 basis points, while for credit against securities the cut will be one per cent.

While the exiting rates for such credit differ between 13.75 per cent and 15.25 per cent.

On the other hand, the bank is providing retail loan to its existing account holders at a discount, which differs between 50 and 100 basis points on the card rate. The discount depends on credit profile of the customers.

In the previous week, the bank's promoter HDFC Ltd launched a special housing loan scheme under which it is offering 9.75 per cent for new loans up to Rs 30 lakh.

Before the special offer, HDFC was taking 10.25 per cent for loans up to Rs 20 lakh and 11.25 per cent for bigger loans. The bank sells home loan products of its promoter.

It may be taken into consideration that across various maturities HDFC Bank last month has reduced deposit rate in the range of 50 to 225 basis points.

Therefore fixed deposit rates have been cut down across four maturities and the highest point of deposit rate of the bank has come down to about 10 per cent.

The government and the RBI with an aim to increase demand have taken several measures to bring down interest rates.

As part of its strategy government has permitted public sector banks to offer line of credit to NBFCs on new purchases, with an aim to boost demand.

HDFC Bank plan to cut down auto loan in some States

Mr V.S. Ashok Khanna, HDFC bank’s Executive Vice-President and Business Head, Car and Two Wheeler Loans in an interview told Business Line that bank might lower its auto loan exposure in markets such as Delhi, Kerala and Uttar Pradesh following the State governments’ stand on repossession of vehicles in these regions.

“The Delhi police have issued directives asking customers having any complaints against recovery agents or collection agencies to call them on a toll free number. We are talking to the individual state governments; in case there is no change in policy, we will have to control our exposure in places like Delhi, Kerala and Uttar Pradesh,” Mr Khanna said.

The strict recovery norms and the strict clause on collection procedures have made the job of banks very difficult. He said there is fear among financiers which has made them cautious of lending.

In this year there has been a slowdown or even negative growth in the vehicle finance industry. He pointed out that these measures can lead to a further slowdown in the industry.

“There has been a slight increase in delinquency but it is not a cause of concern for banks. But what is more worrying is that such policies can turn customers paying their installments on time into willful defaulters. I anticipate further slowdown in the vehicle finance industry in 2009-2010,” he said.

As per the recent approximation by Crisil, the vehicle finance industry is approximately to register a negative growth of around 15 per cent in 2008-09, as against recorded Compounded Annual Growth Rate of 18 per cent between 2002-03 and 2007-08.

HDFC Bank plan to cut down auto loan in some States

Mr V.S. Ashok Khanna, HDFC bank’s Executive Vice-President and Business Head, Car and Two Wheeler Loans in an interview told Business Line that bank might lower its auto loan exposure in markets such as Delhi, Kerala and Uttar Pradesh following the State governments’ stand on repossession of vehicles in these regions.

“The Delhi police have issued directives asking customers having any complaints against recovery agents or collection agencies to call them on a toll free number. We are talking to the individual state governments; in case there is no change in policy, we will have to control our exposure in places like Delhi, Kerala and Uttar Pradesh,” Mr Khanna said.

The strict recovery norms and the strict clause on collection procedures have made the job of banks very difficult. He said there is fear among financiers which has made them cautious of lending.

In this year there has been a slowdown or even negative growth in the vehicle finance industry. He pointed out that these measures can lead to a further slowdown in the industry.

“There has been a slight increase in delinquency but it is not a cause of concern for banks. But what is more worrying is that such policies can turn customers paying their installments on time into willful defaulters. I anticipate further slowdown in the vehicle finance industry in 2009-2010,” he said.

As per the recent approximation by Crisil, the vehicle finance industry is approximately to register a negative growth of around 15 per cent in 2008-09, as against recorded Compounded Annual Growth Rate of 18 per cent between 2002-03 and 2007-08.