Canara Bank Spares Home Loans

Monday, 30 June , 2008, 12:00

Canara Bank has left home loan and auto loan borrowers out of the purview of the hike in interest rates it announced on Friday.

The bank had announced a 50 basis point hike in BPLR (benchmark prime lending rate), taking it to 13.25 per cent, but said the hike would not cover home loans and auto loans, a welcome relief to its customers. Many other banks have increased the floating rates of home loans in tandem with the hike in PLR they announced, following the RBI’s decision to hike repo rates and CRR.

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M B N Rao, Chairman and Managing Director, Canara Bank, told Business Line that the bank had decided ‘for the time being’ not to apply the hike in BPLR to home loan and auto loan customers.

The RBI has announced measures to tighten fund flow to curb inflation.

Home loans are not among the causative factors for the inflation, which continues to be high due to various reasons, including high fuel costs and other external pressures.

Also, housing loans are not a short-term proposition and are part of a life-long investment by the customers with whom Canara Bank has a well-rounded relationship. So the bank does not want to tinker with the loans and other ‘smaller commitments’ (auto loans) as it expects inflation to taper off in the coming months.

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Rao said that Canara Bank dropped the BPLR in the first quarter and had even now waited before hiking it.

Source:
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