SBI has waived processing fee for its car loan. (Image courtesy SBI car loan portal)
In a bid to boost car sales amid piling inventories, the State Bank of India (SBI) on Tuesday waived processing fee on car loans during the upcoming festival season and is also offering the lowest interest rate starting 8.70 per cent on car loans, with no escalation in interest.
The move is likely to be followed by other PSBs in different formats to make credit cheaply available to the buyers. Officials from at least three public lenders said they would respond to the SBI move in their own way to benefit auto buyers during the festival season.
The Indian auto sector is going through an unprecedented downturn. Auto sales in July this year fell to a 20-year low, and at the current monthly average sales, total projected annual sales of passenger vehicles for 2019-20 may drop to yearly sales levels seen in 2014-15 and 2015-16.
Tuesday's SBI announcement came after the largest Indian lender on Sunday extended by 15-30 days the loan repayment period for stressed automobile dealers to help them out of current inventory builds-ups. The bank has an exposure of Rs 11,500 crore to auto dealers.
"Normally, the repayment period is 60 days. So we extend it for 75 days for some dealers and to 90 days for a few others. We are talking to each dealer. We also had meetings with the Federation of Auto Dealers. We are actively engaged with all of them. On a case to case basis, whichever dealer has faced any problem on account of excess inventories, we have been working out solutions for all of them," said P.K. Gupta, Managing Director-Retail & Digital Banking, SBI.
The State Bank of India has also announced to bring in SBI Home Loan with the lowest interest rate of 8.05% based on the #Repo Linked Lending Rate. "#SBI gives you an extra reason to celebrate! With the lowest interest rate of 8.05% based on the #Repo Linked Lending Rate, for your #HomeLoan this #festive season will definitely be more joyous," SBI tweeted on Monday.
#SBI gives you an extra reason to celebrate! With the lowest interest rate of 8.05% based on the #Repo Linked Lending Rate, for your #HomeLoan this #festive season will definitely be more joyous.
— State Bank of India (@TheOfficialSBI) August 19, 2019
#StateBankofIndia #SBIHomeLoan #RLLR pic.twitter.com/7OymgzQ4cq
This might come as a piece of huge news for customers who have a home loan with SBI or are planning to shift their loan to it.