Bank of Baroda reduces car loan and mortgage rates ahead of festive season

With the festive season imminent, India’s state-owned lender, Bank of Baroda , said on Thursday that it is reducing car loan and mortgage rates. According to a press communique, the bank’s floating interest rates for car loans have been reduced to 8.15% per annum (from 8.40% per annum), effective immediately.

“The festive season is an auspicious time for new beginnings, with many families looking to fulfil their aspirations of owning a new vehicle,” Sanjay Mudaliar, Executive Director, Bank of Baroda, said in a statement. The bank has also reduced the interest rate on Baroda Mortgage Loan—Loan Against Property—from 9.85% per annum to 9.15% per annum, effective immediately. The bank also offers an attractive fixed rate of interest on Baroda Car Loans, linked to the bank’s six-month MCLR, starting at 8.65% per annum.

Bank of Baroda has stated that the reduced rates are in addition to the rate reduction implemented by the bank following the 100-basis-point cut in the policy repo rate by the Reserve Bank of India (RBI). The new rate starting at 8.15% per annum applies to loans for the purchase of a new car and is linked to a borrower’s credit profile.

From the ramparts of the Red Fort on India’s 79th Independence Day, Prime Minister Narendra Modi announced that the government is going to rationalise the GST rates. The rationalisation of rate cuts aims to catalyse domestic consumption during the festive season, which is viewed as an auspicious occasion across the country for purchasing consumer durables, such as automobiles, electronic appliances, or even property. The Indian automobile industry, in particular, has been bullish about the festive season due to the impending GST rate cut and the repo rate cut, which will incentivise customers who have been deferring purchases otherwise.

Boosting domestic consumption is also crucial in light of the 50% punitive tariffs—one of the steepest tariffs imposed—by the Trump administration on India, effective as of August 27. The imposition of a 50% tariff has particularly hit a number of industries such as textiles, diamond and jewellery, seafood, ceramics, chemicals, handicrafts, carpets, etc., whose exports are skewed towards the U.S., and which will face a severe erosion of competitiveness against China, Vietnam, Cambodia, the Philippines and other Southeast and South Asian countries.