Effect of Demonetisation: SBI Cuts Home Loans to 6 Year Low; 3 Crore Kisan Credit Cards Will Become Rupay Cards
Some sections of the media and Opposition parties have been slamming Modi Govt due to the side-effects of demonetization move. However, the positive effects of this massive economical gamble is now slowly but gradually becoming visible, thereby silencing the critics of this move.
India’s largest bank, SBI, will now offer cheapest home loans in 6 years, as they have cut their lending rates by 90 basis points. This new reduced home loan rate is applicable for those loans which maturing till next three years.
Technically, Marginal Cost of Funds based Lending Rate (MCLR) has now been reduced from 8.9% to 8% thereby triggering low home as well as auto loans. This makes it as the lowest benchmark rate for SBI in last 6 years. Since January 2015, SBI has lowered their benchmark rate by 200 basis points.
The following ‘visible changes’ would be witnessed now for home loan rate (floating):
- For Loans Upto Rs 75 lakh: Women borrowers would now pay 8.60%; and others would pay 8.65%
- For Loans Above Rs 75 lakh: Women borrowers would now pay 8.65% while others would pay 8.70%
- For Fixed Home Loan upto Rs 30 Lakh: Women borrowers would now pay 8.50% while others would pay 8.55%
PM Modi had earlier asked the banks to pass on the benefits of demonetization to the common man, as he said during the 2016’s last address to the nation: “keep the poor, the lower middle class, and the middle class at the focus of your activities,”
Govt. of India has welcomes this lowering of lending rates by SBI, as Economic Affairs Secretary Shaktikanta Das said, “Welcome reduction of interest rates by SBI. Loan disbursements expected to pick up. Positive for the economy,”
In a tweet, he clearly described this as a ‘Trend of interest rate reduction follows demonetisation. Banks have substantial quantum of low cost funds now.’
Following SBI, other banks are also planning to reduce home loan rates. As per reports coming in, PNB, Union Bank of India and State Bank of Travancore has already reduced their lending rates, and other banks are expected to follow soon.
3 Crore Kisan Credit Cards To Become Rupay Cards
Meanwhile, during addressing the nation on December 31st, PM Modi announced that over 3 crore Kisan Credit Cards would be now converted into Rupay cards. This massive exercise would be done in the next 3 months.
With Kisan Credit Card, the issue was cash. In order to pay for any commodity like fertilizer or seeds, the farmer had to first withdraw cash and then pay the buyer. However, with Rupay card, the farmer can now transact online or make digital payments, thereby adapting cashless in a wholesome manner.
This is step to convert Kisan Credit Cards into Rupay Cards is being seen as another major push towards cashless economy, especially in the agriculture sector.
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