Bank of Maharashtra cuts personal loan rates by up to 40 basis points

Facing competition from its financial colleagues, state-owned Bank of Maharashtra (BoM) has lowered interest rates on loans to individuals – home and vehicle – by as much as 40 basis points. The revised rates are linked to the credit rating of borrowers and are effective December 13.

AS Rajeev, chief executive and CEO of BoM, said the bank had revised rates to between 10 and 40 basis points tied to the CIBIL score. “Many of the Bank’s clients have savings accounts with us but have taken out loans, particularly for housing, from other financiers,” he added. The public sector lender will work to bring them back into its fold.

The rate for new home loans would be 6.4% against 6.8% for those with a credit rating above 800. Competing lenders provide loans at a rate between 6.5 and 6.8%. The home loan portfolio is growing by around 20% year-on-year and expects it to grow 25% year-on-year by the end of fiscal year 22, Rajeev said. The Pune-based lender’s home loan outstanding stood at Rs 19,112 crore at the end of September 2021.

In addition, auto loans would be available at 6.8 percent against the old rate of 7.05 percent for people with high credit scores. Its vehicle loan portfolio is small at Rs 1,844 crore as of September 30, 2021.

Asked about the impact of the rate cut on the net interest margin (NIM), he said the cost of funds is low at 3.44% (September 2021) with a share of current accounts and accounts payable. savings (CASA) from 53 to 54% in total deposits. This allows the benefits to be passed on without damaging the NIMs too much. His NIM was 3.27% at T2Fy22.

Obtaining borrowers with a high credit score would help lower the cost of credit and improve the profile. The investment cycle is changing and the use of corporate sanctioned credit limits is increasing. This will contribute to a 16-17% growth in loans by the end of the current fiscal year, he said.

Its gross advances increased 11.44% year-on-year to Rs 115,236 crore at T2FY22, from Rs 103,408 crore a year ago.

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