Kotak Mahindra Bank maintains low interest rate

The bank wants to be challenger in home loan market

Even as its competitors have hiked rates on their home loans lately, Kotak Mahindra Bank recently announced its decisions to continue with its rate structure starting at 6.65 per cent.

“The product is aimed to grow our market share… we are a challenger in the market,” its president for consumer assets Ambuj Chandna said over the phone.

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It can be noted that SBI had hiked its rate offering by a steep 0.25 per cent last week after the end of a limited period offer where they were priced at 6.75 per cent. Some lenders are said to have taken SBI’s cue and hiked their offerings as well. Before the SBI move, HDFC had hiked the interest rate on its deposit offering as well.

Chandna said home loan is a key focus area for Kotak Mahindra Bank because of the product’s ability to establish a deeper connect with customers, portfolio performance from an asset quality perspective over the last two years and also the headroom for growth.

When asked about the cost of funds, he said there has been no move externally like a hike in policy rate by RBI which should lead to a hike and also stressed that the share of the low-cost current and saving account deposits is the highest for the bank. He parried a question on the move’s impact on net interest margin.

It can be noted that realty demand had received a leg-up because of a cut in duties by states like Maharashtra till March 31. However, the impact of the end of this scheme is yet to be seen.

In a statement, the bank said the low interest of 6.65 per cent will be dependent on the loan to value ratio in a proposal and also the borrower’s credit score. The interest rate is applicable for both home loans and balance transfer loans across loan amounts, it said, adding that the bank has attractive rates for both salaried and self-employed people.