Home, auto loan rates may come down

Home and auto loans are likely to come down after the Reserve Bank of India on Monday cut the cash reserve ratio by 25 bps, a move which will infuse Rs 17,000 crore of liquidity into the banking system.

After the RBI move, State Bank of India said that it will soon decide on its lending rates for home and auto loans.

"Definitely, on interest rates there is a downward bias which is very supportive of growth. I am happy that RBI has taken into account our persistent request to do away with CRR," SBI Chairman Pratip Chaudhuri said.

RBI's monetary policy action will unlock Rs 2,500 crore for SBI and there will be savings to the tune of Rs 200 crore.

Once SBI decides to lower the rates for home and auto loans, other banks would most likely follow the lead of the country's largest bank.

Meanwhile, Reserve Bank Deputy Governor K C Chakrabarty said that banks are not passing on the benefit of cut in policy rates to the borrowers, asking lenders to undertake reforms and bring down their operation costs.

"Within the interest rate structure, if banks increase their efficiency, interest rates will come down. What we call operational efficiency of the banks and that is one thing that should happen", he said.