HOME   
   NEWS   
   BUSINESS   
   CRICKET   
   SPORTS   
   MOVIES   
   NET GUIDE   
   SHOPPING   
   BLOGS  
   ASTROLOGY  
   MATCHMAKER  


Search:



The Web

Rediff








Business
Portfolio Tracker
Business News
Specials
Columns
Market Report
Mutual Funds
Interviews
Tutorials
Message Board
Stock Talk



Home > Business > Business Headline > Report

Pvt banks take lead in lending rate reduction

BS Banking Bureau in Mumbai | February 26, 2003 10:36 IST

When it comes to lowering lending rates, private Indian banks are far ahead of their public sector peers, as well as foreign banks. For the quarter ended September 31, 2002, private banks' lending rates for term loans dropped to 5 per cent in some cases.

In contrast, the term lending rate of state-owned banks dropped to 8.7 per cent and that of foreign banks to 6.2 per cent.

The Reserve Bank of India has for the first time collated data on lending rates. According to the RBI, the rates for 95 per cent of the term loans of private banks for the second quarter of 2002-03 ranged between 5 per cent and 19.5 per cent.

Private banks disbursed 60 per cent of their term loans at rates ranging between 6.5 per cent and 18 per cent.

The comparable figures for state-owned banks: 8.7-16.5 per cent for 95 per cent of their term loans. Incidentally, this range is also applicable to 60 per cent of the term loans disbursed by state-owned banks.

The lower end of foreign banks' term lending rates is lower than that of public sector banks at 6.2 per cent. But at the higher end, the rate is as high as 22.5 per cent.

In the case of working capital loans, the range of interest rates charged by public sector banks is 8.5-16 per cent for 60 per cent of their loans, that of foreign banks 6.4-25 per cent and that of private banks 6.4-18 per cent.

However, the median range of interest rates on advances over Rs 200,000 still remains high. For instance, the public sector banks disbursed 95 per cent of their term loans at 11.5-16 per cent and 60 per cent of their term loans at 12.25-14 per cent in September.

For foreign banks, the median rate for 95 per cent of their loans is 11.8-17 per cent. They disbursed 60 per cent of their term loans at 12.75-14.5 per cent.

The median range of term loan rates for private banks is 11.5-17 per cent for 95 per cent of their loans and 13.5-15 per cent for 60 per cent of their loans.

The lower end of the loan rates in the September quarter dropped substantially over the June quarter. In the case of public sector banks, the rate band dropped from 9.75-16.5 per cent to 8.7-16.5 per cent for term loans.

This was applicable to 60 per cent of their loans. For foreign banks, the lower end of the band dropped from 7.2 per cent to 6.57 per cent and for private banks from 6.75 per cent to 6.5 per cent.


Powered by



Article Tools

Email this Article

Printer-Friendly Format

Letter to the Editor



Related Stories


Banks plan to raise lending rates

How low can the deposit rate go?

Bank shares affected



People Who Read This Also Read


A Budget for banks?

FDI sectoral cap hike unlikely

Budget may widen fiscal deficit







HOME   
   NEWS   
   BUSINESS   
   CRICKET   
   SPORTS   
   MOVIES   
   NET GUIDE   
   SHOPPING   
   BLOGS  
   ASTROLOGY  
   MATCHMAKER  
© 2003 rediff.com India Limited. All Rights Reserved.