Reduced interest rate likely to increase demand
San Francisco, CA -- (SBWIRE) -- 09/11/2012 -- The Reserve Bank of India showed in its data report that in banks’ personal line business, the auto loans have been the fastest recorded segment all over India and a major factor for economic growth.
The recently announced decrease in interest rate in auto loans is likely to boost the demand throughout the country.
However, according to the same report consumer durables have been hitting record drops in the recent times.
The outstanding amount on car loans has touched the record figure of 100 crore until July 26, in the preceding year and has made the car loan section the only one that has crossed the trillion rupees in the personal lines secure loans category.
The growth rate reached 20 percent which is much higher than the overall 17 percent growth rate in bank credit.
While talking about the car loans, the officials of different banks stated that they observed that the demand for auto loans is satisfactory, especially for diesel vehicles.
Mr. Pratip Chaudhuri, chairman of SBI, said that after the decrease of interest rates on auto loans, the monthly disbursements have gone high up to Rs 972 crore as compared the previous Rs 550 crore. Pratip stated at timesofindia.indiatimes.com that, “This is despite a shutdown at Maruti's Manesar plant. We are disbursing around 1,800 car loans a day, but with better execution this could perhaps have been 3,000.”
However, the home loans growth remained a bit slow because of the slow transactions observed in different cities around India.
In consumer durables, the loans remained consistently sluggish and the amount fell down to 6,930 crore, which is 29.4 percent less, as compared to the loan amount of previous year.
Mr. P. Chidambaram, the federal finance minister, directed public sector banks to cut down their interest rate on auto and home loans to boost the demand.
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