Home, Auto, Personal Loans Will Get Cheaper, Say Bankers

New Delhi: Leading banks on Wednesday said that the RBI rate cut, coupled with the revision in stance to accommodative, is a swift and timely move and a forward guidance to the market to stay supportive against evolving global uncertainties, along with empowering the consumers.

The 25bps rate cut is likely to spur demand for home, auto, and personal loans, especially in tier 2 and tier 3 markets, where interest sensitivity is higher, said Binod Kumar, MD and CEO, Indian Bank.

Retail loans grew over 18 per cent YoY as per recent trends and a lower rate environment could further accelerate consumption and support economic momentum. "Indian Bank is fully geared to pass on the benefits swiftly and responsibly to our customers, ensuring inclusive credit growth," he said in a statement. According to C.S. Setty, Chairman of the State Bank of India (SBI), the revision of stance to accommodation will cushion the secondary impact of tariffs on the domestic economy. "With inflation under check, growth imperatives will take precedence in FY26," he said in a statement. Setty further stated that on the regulation side, the market-based securitisation framework for stressed assets, the review of policy on gold lending, and non-fund-based facility are timely. "Widening of the co-lending framework gives wider choices to all parties concerned," he noted.

Reserve Bank Governor Sanjay Malhotra announced a major proposal to liberalise the RBI’s co-lending guidelines for banks and NBFCs to expand their ambit beyond priority sector lending, to which they are currently restricted.

The present framework limits co-lending to partnerships between banks and non-banking financial companies (NBFCs) to priority sector lending such as agriculture, micro-enterprises and loans to weaker sections.

According to Kumar, the change in stance to accommodative is sentimentally positive, allowing room for better liquidity and growth.