Home, vehicle, other retail loans to become cheaper: Nirmala Sitharaman

Union Finance Nirmala Sitharaman on Friday said banks will make home and auto loans cheaper as they have decided to pass on rate cuts by the RBI to borrowers through MCLR reduction, and launched repo rate or external benchmark-linked loan products. The government announced a slew of measures to ensure that loans for home, vehicles and consumption goods become cheaper and widely available through banking and non-banking finance companies.

Addressing the media in New Delhi, Sitharaman said banks will launch repo rate and external benchmark-linked loan products that will lead to reduced easy monthly installments for housing, vehicle and other retail loans.

The minister also announced additional liquidity support of Rs 20,000 crore to housing finance companies (HFCs) by the National Housing Bank (NHB), thereby increasing the total support to Rs 30,000 crore.

The government announced partial credit scheme for purchase of pooled assets of non-banking finance companies and HFCs up to Rs 1 lakh crore to be monitored at highest level in each bank. Prepayment notices issued to NBFCs will be monitored by banks.

The minister said that NBFCs will be permitted to use the Aadhaar authenticated bank 'Know Your Customer' (KYC) to avoid repeated processes.

The government has decided to make necessary changes in PMLA rules and Aadhaar regulations to ease the lending process.

"Working capital loans for industry will also become cheaper," Sitharaman said.

To reduce harassment and bring in greater efficiency, public sector banks (PSBs) will ensure mandated return of loan documents within 15 days of loan closure.

"This will benefit borrowers who have mortgaged assets," Sitharaman said.

(With PTI inputs)