India's top mortgage lender HDFC has cut its home loan rate by 20 basis points to 9.9% with effect from Monday. With this rate cut HDFC's offerings are cheaper than the country's largest lender State Bank of India's home loans.
The reduction in retail prime lending would benefit all customers and the reduction will also be applicable on loans to Non-Resident Indians (NRIs), the corporation said. HDFC also revised its deposit rates.
Keki Mistry, vice chairman and managing director, HDFC said Asset Liability committee met over two days. The interest margins will be protected despite the reduction in home loan rates. The home loan company has also slashed deposit rates by about 20 basis points. Mistry said the interest rates in the system could soften further. He, however, did not specify if HDFC would contemplate go for another round of reduction.
Earlier this week State Bank of India (SBI) reduced its base rate or the minimum rate at which banks lend to customers. The move was followed by other banks like ICICI Bank and HDFC Bank cutting their base rates. With these cuts, their home loan rates have also declined.
The rate cut decisions were taken by banks after the Reserve Bank of India (RBI) nudged them to do so.
Meanwhile, HDFC also received an approval from RBI to raise external commercial borrowing (ECB) of up to $ 500 million. The approval is valid for a period of six months.
On the external commercial borrowings, HDFC executive said company has just received approval and it to finalise details. It would benefit from reduction in spreads in market and upgrading of outlook on India’s sovereign rating by Moody’s to “positive” from stable. The spreads in international markets have come down by about 50 basis points in the last few months.
The corporation had posted a 12% rise in net profit for the third quarter of FY15 at Rs 1,425 crore on the back of higher loan growth. As on December 31, 2014, the loan book stood at Rs 2.2 lakh-crore, against Rs 1.9 lakh-crore a year ago, a growth of 14%.
Net interest margin (NIM) stood at 3.93% in the quarter under review, compared with 3.98% in the year-ago period.
12% rise is very good. With that rate of increment in the profit people may have big hopes with the market too. Kamlesh I have been reading your blog posts for quite a long time. You have good insight about banking system. Keep writing useful information.
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Apoorva
Thanks for your compliment.
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