SBI sees significant pickup in car loan demand in August

SBI sees significant pickup in car loan demand in AugustState Bank of India (SBI) saw a significant increase in demand for car loans in August, thanks to a cut in interest rates on auto loans by the state-owned lender.

SBI chairman Pratip Chaudhuri confirmed the strong pickup in demand for car loans. He said the demand for car loans almost doubled in August from the previous months. He noted that the pickup in car loan demand was despite a short supply from Maruti.

Speaking on the topic, Chaudhuri said, "Earlier we used to disburse around Rs 550 crore of car loans a month. In August, we distributed close to Rs 1,000 crore despite a short supply from Maruti."

Chaudhuri added that SBI is now financing as many as 1,800 cars per day.

Demand for car loans picked up after SBI announced a cut in interest rates for auto loans as well as home loans in wake of the Reserve Bank of India's announcement of one per cent cut in the Statutory Liquidity Ratio (SLR) in the first quarterly review of monetary policy.

SBI hacked interest rate on car loans by 50 basis points to 10.75 per cent across tenors. It also made home loan more affordable by bringing them down to 10.25 per cent and 10.4 per cent for advances up to Rs 30 lakh and above Rs 30 lakh respectively.

On Monday, Punjab National Bank (PNB) also announced its decision to slash car loan interest rate by 50 basis points, and home loan interest rate from 10.75 per cent to 10.5 per cent. Separately, Allahabad Bank slashed retail interest rates and stopped charging processing fees on retail loans. It cut home loan interest rate and car loan interest rate by up to 200 basis points and by 25 basis points respectively.

Banks slashed interest rates after Finance Minister P Chidambaram urged them to lower the rates to boost consumer loans.