Bank of Maharashtra has reduced home loans rates by 20 basis points to 8.40%, making it one of the lowest in the industry, to attract new borrowers and push loan growth ahead of the fiscal closure.
The Pune-based state-owned lender thus becomes the second bank in as many days to cut home loan interest rate. Last Friday, Bank of Baroda slashed the rate by 40 basis points to 8.50%.
“It’s a business strategy to further improve the quality of retail advances, especially home loan advances,” BoM managing director AS Rajeev told ET, responding to a query as to what prompted the bank to reduce home loans rates even as the rate tightening cycle is not over yet.
He said that the lowest rate offered is for the best borrowers who have high Cibil scores. For this group, defaults are apparently nil.
The bank also seeks to tap higher cross-selling opportunities as the borrower base grows. Rajeev said that borrowers with higher Cibil scores usually have reasonably good savings balances and products sold to these customers are typically around four.
“During the current month, there is an upward trend in CASA (current and savings account) and thereby slight benefits in interest rate margin, which we are passing on to customers,” the MD said.
BoM had earlier waived processing fee for home loans as well as gold loans and car loans, it said Sunday.
State Bank of India and Housing Development Finance Corporation offer home loans at 8.50% minimum rate.