ICICI Bank follows others, cuts home loan rates

One of the largest private sector banks in India, ICICI Bank, has cut home loan rates by 0.25% for its new as well as existing borrowers. 

State Bank of India (SBI) and HDFC Ltd have already brought down their home loan rates by upto 0.25% for their new borrowers. SBI is now offering home loan to women at 9.85% per year and at 9.90% for others. 

However, monthly payments for a home loan isn't expected to come down by a lot. SBI said, "The revised EMI per lakh for a loan tenure of 30 years will be Rs 867 (for women under HER Ghar) and Rs 871 (for others) as against Rs 885 and Rs 889 respectively, prior to reduction in base rate, it added."

The banks are bringing down their home loan interest rates after cutting their lending base rates following a rap on the knuckles by the Reserve Bank of India (RBI) for not following the two repo rate cuts. 

Last week, many banks including State Bank of India, ICICI Bank, HDFC Bank and Axis Bank cut lending rate by up to 0.25% after RBI Governor Raghuram Rajan's tough talk with bankers on the issue.

Banks maintained status-quo when RBI brought down repo rates twice saying that their cost of funds is high and liquidity is poor. 

However, RBI governor Rajan called this explanation "nonsense" during the first bi-monthly monetary policy announcement in first week of April. RBI did not change its monetary policy stance and maintained repo rate at 7.5% and Cash Reserve Ratio at 4.0%. 

(with agencies)