HDFC Bank may up auto loans interest rates by 0.50%

MUMBAI: Private sector lender, HDFC Bank, is likely to raise its auto loan interest rates by 0.50 per cent in the next 7-10 days, a senior bank official said on Friday.

"Borrowing rates have gone up, we are likely to raise our rates ( auto loans) by 0.50 per cent in the next 7-10 days," HDFC Bank's Senior Executive Vice-President, Ashok Khanna, told media here today.

Another private sector lender, Kotak Mahindra Bank, is also feeling the pressure to raise its auto lending rates, one of its senior officials said. "There is a pressure to raise our interest rates on vehicle loans but we have not yet taken a decision on it," Kotak Mahindra Bank's Head of Consumer Banking, K V S Manian, said.



With deposit rates going up, there is a possibility of a 0.50 per cent hike in auto loan interest rates, he said, emphasising, however, that the bank has not yet taken a decision on the matter.

Its auto loan rates range between 9.5 per cent to 10.25 per cent, Manian said. HDFC Bank's Khanna said that the market is a position to "comfortably absorb" the hike in lending rates. "By the year-end, there is even a possibility of rates going up by 1 per cent," he added.

The bank's average auto loans interest rates are in the range of 9.5 per cent (for D-premium category) to 11 per cent (A-category), he said. "There is a huge supply shortage and as new models come into the market, demand (for cars) will escalate," Khanna said.

The lender's car-loans disbursement per month is around Rs 1,400-crore while for the entire universe of vehicle financing, it stands at around Rs 2,000-crore per month, he said.