bank of maharashtra: Bank of Maharashtra cuts home and auto loans, but expects less impact on NIM


The state-owned company has cut mortgage and auto lending rates in an aggressive push that has lowered interest costs below rates offered by the country’s largest lender, the State Bank of India and mortgage lender Housing Development Finance Corporation.

The Pune-based BoM cut mortgage rates by 40 basis points to 6.4% from 6.8% previously and auto loan rates by 25 basis points to 6.8% from 7.05%. These fine rates will be available to customers with the best credit scores from December 13, the bank said.

A basis point is one hundredth of a percentage point. SBI offers real estate loans at 6.7% minimum per year and auto loans at 7.25%. The festive HDFC rate on mortgage loans also starts at 6.7%.

“The rate cut is aimed at increasing demand and increasing our credit-to-deposit ratio,” BoM chief executive AS Rajeev told ET.

“The current reduction may not have an impact on the Net Interest Margin (NIM) because the increase in credit will generate more net interest income (NII). This is mainly due to the shift from investments to credit, this credit also of quality because of the higher Cibil rating, “he said. said, expecting a sobering impact on the cost of credit going forward.

The BoM was among a handful of lenders who reported an increase in the NII as well as the NIM for the second quarter ending in September compared to the same period last year, while most public sector lenders have recorded a decline in these ratios following the drop in lending rates before the holiday season. season.

Its NIM stood at 3.27% in the second quarter compared to 2.57% the previous year.

Rajeev said there would be no immediate change in deposit rates. He said rates have bottomed out and may continue to hover around that level this fiscal year with a maximum bullish movement of 25 basis points.

With the latest rate cuts, the bank expects home loans to grow at a rate of 25%, better than the 20% growth it is currently experiencing.

“We offer one of the lowest interest rates for personal loans, especially home and auto loans in the industry,” said Executive Director Hemant Tamta.