Punjab & Sind Bank cuts home, auto loan rates after RBI’s repo rate cut

State-owned lender Punjab & Sind Bank (PSB) announced a cut in home and auto loans for new borrowers by up to 0.75 per cent.

"Punjab & Sind Bank has made drastic changes in the terms for auto and home loans for the benefit of people at large," said bank's Chairman and Managing Director D P Singh in a statement issued.

The announcement coincided with the RBI's annual credit policy which reduced the benchmark lending rate by 0.5 per cent to 8 per cent.

In home loan, interest rates have been reduced between 0.25-0.50 per cent while for auto loan it varies between 0.25-0.75 per cent depending on maturity and amount borrowed. The bank offered home loan to its customer between 11-12.75 per cent prior to reduction. At the same time, auto loan rate varied between 12.75-13.75 per cent.

The new rates have become effective from April 1.

Giving the details Singh claimed that the EMI for auto loan is lowest at Rs 1,765 per lakh for the longest repayment period up to 7 years.

The bank is offering home loan at lowest EMI of Rs 1,016 per lakh (up to loan amount of Rs 30 lakh) with longest repayment period up to 25 years and no prepayment charges are levied, he claimed.

No advance EMI are required to be deposited and interest is charged on daily reducing Balance basis, the statement said.

Meanwhile, the RBI reduced the short-term lending (repo) rates to eight per cent from 8.5 per cent.

In the Annual Monetary Policy, 2012-13, RBI doubled borrowings under the Marginal Standing Facility for banks to 2 per cent of their deposits with immediate effect to ease liquidity. It also permitted banks to borrow under the MSF even if they have excess government securities holdings.