The country’s largest PSU bank SBI (State Bank of India) has increased the minimum income requirements for avail the car loan from the bank by over 100 percent. According to SBI, the move is a pro active step that has been taken after witnessing rising signs of stress. It is to be mentioned here that SBI has raised the interest rates of car loans to 12 percent from 11.25 percent earlier, accounting for a surge of 75 basis points.
The car loans from the India’s leading borrower will now be offered to only to those who have an annual income of at least 2.5 lakh per annum, about Rs 21,000 per month. Earlier, the bank was offering car loans to the individuals earning Rs 1 lakh per annum or Rs 8,300 per month. A car loan for seven years duration with an installment (EMI) of Rs 1,765 per lakh had been aggressively promoted by SBI, in last one year.
In a recent statement given to ET, a senior official of the back said, "We have noticed some delinquencies that have happened in the last six months. So we are taking this proactive step." He added that the first reaction is to default on auto loans as the interest rates are much lower than personal loans.
