Bangalore: Vijaya Bank has cut its interest rates on housing loans for both its short and long tenure varying from 100 basis points to 200 basis points and claims to offer the lowest interest rate.

The revised rates came into effect from 10 December 2002. With this reduction from 10 per cent to 8.75 per cent in its fixed rate and a cut of 200 basis points on the floating rate from 10.5 per cent to 8.5 per cent for the 60-month tenure, the bank has the lowest rate on offer, says Vijaya Bank chairman and managing director M S Kapur.

The bank’s decision to drop the interest rates comes in the wake of a rate war triggered in the industry following the reduction of the Bank Rate by the Reserve Bank of India in October 2002.

Vijaya Bank, with a housing loan portfolio of Rs 500 crore, hopes to expand the volume by Rs 200 crore to Rs 300 crore by the end of this fiscal, Kapur adds.

The bank hopes to increase its housing loans portfolio from 7 per cent of the Rs 21,000-core turnover to 10 per cent of its total business portfolio by the end of this fiscal, says Kapur.