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Housing finance company HDFC on Tuesday announced a reduction in its retail prime lending rates (RPLR) by 50 basis points (bps) from March 25.

This is the second time in three months that HDFC has reduced its RPLR. With this reduction, the RPLR has been brought down by 100 bps since December.

“We have over the last few months seen that the measures taken by the government, drop in interest rates, correction in property prices and developers introducing affordable housing by resizing the area have resulted in an increased interest from first-time house buyers,” HDFC joint managing director Renu Sud Karnad said explaining the rate cut.

The advantage of the RPLR reduction will accrue to all the existing floating rate customers over the next three months based on their respective reset dates, a company statement said.

Interest rates on existing loans to non-resident Indians have also been reduced, it added.

HDFC reduced its deposit rates across maturities earlier this month. On an incremental basis, retail deposits for the first nine months - April-December 2008 - formed 55 percent of HDFC’s funding requirement, the statement said.

Source: The Economic Times

Indian Market News, news Bank, deposits, Development, floating rate, HDFC, Interest rates, Lending rates, Loans

People are finding it difficult to get a home loan because banks now need the borrowers to contribute more the value of the property upfront, instead of 15% earlier the upfront contribution is now up to 30% which is double, which is worrying most of the people who once dreamt of building their own dream home.

Banks like SBI and PNB are not lending more than 75% - 80% of the value of the house depending on the requirement, other Public sector banks also are following the same path, private sector banks like ICICI also asks for 30% buyer’s contribution while issuing a home loan. Read more…

Indian Market News, news Bank loans, Banks, EMI, home, Home Loans, Loans, PNB, SBI

The defaulters among the farmers must be one relieved bunch, thanks to the Rs 60,000-crore loan waiver announced by the Centre. Sugarcane farmers’ net profit this season is expected to jump 5-6 times thanks to the waiver, say farmers and millers. Tripartite agreement Routinely, farmers, sugar mills and banks enter into a tripartite agreement on sugarcane. Banks extend a crop loan to the farmer who raises the sugarcane crop and sells it to the mills at a price fixed by the Centre. The mill deducts the bank loan and interest before paying the farmer.

Typically, over 60-70 per cent of the cost of a tonne of sugarcane goes to the bank. This will now be paid to the farmer. Depending on the costs, the farmer usually makes a net profit of about 10 per cent. Till recently, the net income from cane was estimated at about 20 per cent but in the last two seasons, because of the high costs of harvesting, this has dropped to about 10 per cent.

Take home money According to a farmers’ representative, banks disburse about Rs 20,000 an acre as sugarcane crop loan. Taking into account the interest, the total repayment to the banks is about Rs 22,000. Now, thanks to the loan waiver, the small and marginal farmers eligible under the waiver will take home about Rs 22,000 an acre more for the current season.

Effectively, taking an average output of about 40 tonnes an acre, that works out to about Rs 550 more a tonne – that is a net profit of 5-6 times more on cane, they say.

Industry sources said that with the farmers getting a hint of a major concession in the offing ahead of the Budget, they had actually approached the millers to hold on to the cane payments to avail themselves of the benefit.

Source: Business Line dated 05-03-08

Indian Market News Budget, Chidambaram, farmers, Loans, Waiver of agricultural loan