Home loan and consumer durables loan borrowers could look forward to softer interest rates. Following the reduction in the cost of funds, banks are reviewing the interest rate structure, according to the Indian Banks’ Association (IBA). Speaking to the media after the managing committee meeting on Friday, IBA CEO H N Sinor said, “Banks have seen an improvement in their spreads during the financial year.

This is because the incremental credit-deposit ratio this year has fallen to 49% from 130%, seen a year ago. Banks which were forced to raise a large chunk of funds a year ago through bulk deposits are able to renew liabilities at a lesser rate, with a clear differential of 200 basis points.” Mr Sinor pointed out this will clearly give banks the leeway to make fresh lending at lower rates. This follows a statement from the Union finance minister a few days ago, expressing concern on the slowdown in the growth in consumer durables and mortgage loans. The IBA managing committee meeting was attended by the heads of 18 banks, of the total 31 member banks.