New Delhi: There is more good news for consumers after price cuts announced by car makers. Now banks have indicated that they are going to cut interest rates on home loans.
Reports say UCO Bank is planning to reduce interest rate by three per cent for loans below Rs 5 lakh and by two per cent for loans up Rs 20 lakh.
Other Public Sector Unit (PSU) banks are expected to follow suit and cut rates for home loans up to Rs 20 lakh and bring it down to between eight per cent and 10 per cent.
Sources have told CNN-IBN that some PSU banks may cut rates to seven per cent on home loans upto Rs 5 lakh. Interest rates may be cut to 8.5 per cent on loans up to Rs 20 lakh.
Banks say nearly 80 per cent home loans are below Rs 20 lakh. The rate cut was part of the fiscal stimulus announced recently by the Union Government.
The Reserve Bank of India (RBI) is likely to lower risk weightages for small-ticket home loans to give a boost to the housing sector, which means banks, will need to set aside less capital to protect against defaults.
The decision by the RBI was taken in a meeting of bankers at the Finance Ministry on Thursday.
The RBI slashed repo and reverse repo by one per cent and the government announced the Rs 20,000 crore stimulus packages for the housing sector last week.
However, banks have till now resisted from cutting their consumers loan rates and the government may now issue a diktat to enforce it.
Meanwhile, commerce Minister has said that next part of the fiscal stimulus would be announced sometime next week.
The RBI has also warned of a tough financial year ahead.
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