ICICI Bank slashes car loan rates, increases commissions

ICICI Bank which cut retail lending during the credit crisis, has slashed car loan rates and hiked dealer commissions according to people familiar with the matter.

According to a report in The Economic Times , ICICI Bank has cut interest rates on car loans from 10.5 -11.5 per cent to 9.75-10.5 per cent. As these are rack rates, the report says the customer may now get a loan at around 9 per cent as dealers may pass on some of their commissions to customers.

The report quoting sources familiar with the matter says the new rates which are 50-75 basis points lower than those of rivals such as HDFC Bank and Axis Bank, could trigger other lenders to follow suit to protect their market share.

ICICI is keen on the lucrative retail market as consumers return to showrooms lured by record low interest rates and receding fears of job losses. Additional attractions driving the customers back to showrooms are record automobile as the world's biggest names including Volkswagen, Renault and Toyota are lining up new models for India.

ICICI, pioneer in retail lending, was the worst affected Indian bank had had to cut back on retail lending. The bank had a huge presence in overseas markets.

During the lean times, the bank's car loans were down to less than Rs50 crore a month, from a peak of over Rs1,000 crore a month.