Banks are concerned that while they have b
een piling up deposits at high costs, there has been a negligible loan growth in the first five months of 2007-08. A senior Bank of Baroda official commented to B&E, “The bank has to survive in a market which is highly competitive as the home loan demand is elastic. After a series of hikes in 2006- 07, the home loan demand has shown moderation. The rate cut may help to get a better response.” Bank of Baroda has reduced interest rates on home loans by up to 50 basis points to 10-11.50%, especially targeting the coming festival season and expecting the cut to be enough to lure customers. State Bank of India (SBI), the country’s largest lender, too, is considering options for triggering demand for loans, but a review of lending rates is expected some time next month, when the festival season begins. A senior SBI official said, “Banks will have to look at reducing lending rates (for new borrowers) if credit does not pick up till the end of August. We are already five months into the year and advances are more or less fl at, while banks have mobilised huge deposits.”
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een piling up deposits at high costs, there has been a negligible loan growth in the first five months of 2007-08. A senior Bank of Baroda official commented to B&E, “The bank has to survive in a market which is highly competitive as the home loan demand is elastic. After a series of hikes in 2006- 07, the home loan demand has shown moderation. The rate cut may help to get a better response.” Bank of Baroda has reduced interest rates on home loans by up to 50 basis points to 10-11.50%, especially targeting the coming festival season and expecting the cut to be enough to lure customers. State Bank of India (SBI), the country’s largest lender, too, is considering options for triggering demand for loans, but a review of lending rates is expected some time next month, when the festival season begins. A senior SBI official said, “Banks will have to look at reducing lending rates (for new borrowers) if credit does not pick up till the end of August. We are already five months into the year and advances are more or less fl at, while banks have mobilised huge deposits.”For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2007
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
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