Dena Bank Reduces Interest Rate on Home Loans
Founded in 1938 by the family of Devkaran Nanjee, Dena Bank is now a public-sector bank constituted under the Banking Companies Act 1970. It has emerged as the most preferred Bank of customer choice in its area of operation.
Following State Bank of India, Dena Bank too slashed interest rates on home loans to woo customers. Read on to know what prompted the bank to lower interest rates on home loans.
RBI Cuts Risk Weights
For home loans above 30 lakhs, Reserve Bank of India (RBI) has relaxed weight requirements as against Loan to Value ratio. For home loans between 30 to 75 lakhs, the right weight is reduced to 30 percent, while for loans above 75 lakhs, it has been reduced from 75 percent to 50 percent. This move taken by the RBI has prompted the banks to cut the interest rate on housing loans.
Reduction in Home Loan Interest Rate
Housing loans are set become cheaper following RBI's relaxation of provisions for Individual home loans. Dena Bank has reduced 5 basis points for loans between 30 to 75 lakhs and 10 basis points for above 75 lakhs.
Home loans up to 75 lakhs will attract 8.60 percent of annual interest rate while above 75 lakhs will attract 8.70 percent of interest rate after the reduction of home loan interest rate.
The bank has passed on the benefit of RBI's reduction of risk weight to its customers. This is a positive move which will boost the demand in the real estate sector.
Other than the reduction in the home loan interest rate, Dena Bank has also slashed its marginal cost of funds based on lending rate(MCLR) by 0.75 percent. This will make loans linked to MCLR, cheaper.
The implementation of GST has increased the financial services tax by 3 percentage. This includes transactions, ATM withdrawals, processing fees, locker rentals and so many other facilities provided by the bank. Despite the increase in the taxation, Dena bank's reduction of home loan interest rate is a pleasant surprise to its customers.
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