Offers are pouring in from these banks, which account for around 70 per cent of the retail business done by all banks, excluding Non-Banking Finance Companies. Leading players such as State Bank of India, Canara Bank, Dena Bank, Bank of Baroda, Punjab National Bank, Allahabad Bank, Corporation Bank, Central Bank of India, UCO Bank have announced several offers on various loans.

The discounts in interest rates and other goodies on offer are an extension of schemes, which were expiring this month. These would now be available till the end of Diwali and beyond up to New Year.The festival season that started last month with Ganesh Chaturthi, extends into Navratri and Diwali and stretches over two or three months. Many banks use this period as an opportunity to do more business.

S Raman, CMD of Canara Bank, said, “We are rolling out our festival offer on October 10 which will remain open till January 15, 2012. We will be reducing interest rates across all slabs and tenures for home loans by 50 basis points (0.5 per cent) and 100 basis points (1 per cent) for vehicle loans, in addition to waiving off the entire processing charges on home and auto loans.”

“We will also be waiving off completely the additional interest rate of 0.25 per cent that we normally charge to a customer borrowing for a second house,” added Raman of Canara Bank.

Another lender, Dena Bank last week also reduced interest rates on new housing loans and car loans by 0.5 per cent in the floating rate category. The offer that begins from October 10 would last till December 2011. Dena Bank has also reduced its processing fees on loans by half.

A senior official of Dena Bank said, “Festival season is the time when people buy flats and cars despite liquidity constraints. Several builders and car manufacturers are offering discounts too.”

On the same lines, the country’s largest lender State Bank of India (SBI) last month announced that it has extended the 0.25 per cent concession on home loans till December. The scheme, which was open till October 31, 2011, has now been extended till December 31. Under the scheme, a borrower will now be charged an interest of 10.50 per cent as against the earlier 10.75 per cent on loans up to Rs 30 lakh. Similarly, a loan above Rs 30 lakh, but up to Rs 75 lakh will attract an interest of 10.75 per cent. For auto loans, SBI is offering 85 per cent finance with a free accident insurance policy in addition to waiving off its pre-payment penalty and processing fees completely till next month. Punjab National Bank (PNB) has extended ‘Car Loan Dhamaka’ offer that it had launched during the monsoon season till December 2011. The offer was ending last month. SP Singh general manager (retail) at PNB said, “We are offering 100 per cent finance of the car price and interest rate reduction of 0.25 per cent on all car loans.” Bank of Baroda till end of November is offering 0.25 per cent reduction on applicable interest rate and a complete waiver of charges on both home and car loans. Allahabad Bank has reduced interest rates by 50 basis points on home and auto loans besides reducing processing fees. Corporation Bank has reduced interest on home loans by 0.5 per cent with 50 per cent reduction in processing fees and 0.25 per cent reduction on Car loans that have a repayment period of 36 months. However, private sector banks have refrained from reducing interest rates and waiving charges. Recently, top private lenders such as ICICI Bank, HDFC, and LIC Housing Finance rolled out a fixed rate home loan scheme where the interest rate would remain fixed for the initial one to five years and later change to floating rate. On the same lines, Axis Bank rolled out a fixed rate home loan product for 20 years.

A head of retail portfolio of a leading private bank said, “We have not passed the recent RBI hike to our customers. We are not increasing rates in the festive season.”

RBI has increased key policy rates by 300 basis points since March 2010. With the rising interest rates, home loans rates on an average have risen by 250 basis points.