HDFC cuts interest rate on home loans by 20 bps to 9.9 per cent

HDFC, the housing finance firm, reduced its home loan rate by 20 bps to 9.9 per cent on Friday. HDFC said in a statement that the new rate would come into effect from April 13.

The move comes two days after the Reserve Bank of India announced status quo in its monetary policy review and Governor Raghuram Rajan prodded the banks to cut lending rates to pass the effects of two rate cuts in January and March.

According to the statement, the reduction in the retail lending rate would benefit all customers, including non-resident Indians. With this, EMIs would come down for the borrowers.

Besides, HDFC has also revised downwards its deposit rates across various maturities.

HDFC also said that it has got the Reserve Bank of India's clearance to raise up to US $500 million (about Rs 3,100 crore) as external commercial borrowing (ECB) to fund its business growth. The approval to raise up to US $500 million is valid for six months, HDFC said.

According to market analysts, since HDFC is a bellwether, other banks which are currently in wait-and-watch mode could also follow suit in order to protect their market share.