Concerned over the slow credit off-take in recent months, a clutch of banks have decided to take advantage of the festive season to woo customers by slashing interest rates on home, auto, consumer and personal loans.

The banks include — State Bank of India and ICICI Bank, along with private home loans lender, HDFC. SBI has cut interest rates on home, auto and personal loans by 0.5-1 per cent. It has also simultaneously reduced rates on deposits under two special schemes by 0.25 per cent to 9 per cent with effect from October 8.

The public sector bank has also launched a reverse mortgage scheme for senior citizens.

The rate cut on retail loans will be applicable on all new loans from October 8 to December 31, while reverse mortgage scheme for senior citizens will be offered at all its branches from October 12.

India’s largest private sector lender, ICICI Bank, too has cut interest rates on its floating home loans by 0.5 per cent which will now be at 11 per cent. The rate cuts by the country’s two top banks assume significance, as they come in the backdrop of Union Finance Minister, P Chidambaram’s observation recently that banks could consider rate cuts to stimulate growth in sectors like auto which were in the throes of a slowdown.

Both SBI and ICICI Bank had held back from announcing rate cuts till now and it was speculated that both were awaiting the Reserve Bank’s monetary policy review this month-end before taking a decision on their rates.

SBI has also reduced its rates on car and two-wheeler loans, by 1 per cent. These would now be available at 11-12 per cent. Personal loans have also become cheaper by 0.5-1 per cent along with a 50 per cent concession in processing charges. Earlier, HDFC too had reduced its rates with its Chairman Deepak Parekh indicating that cost of funds for the institution had come down and hence it was passing on that benefit to its customers.