Borrowers make merry in 2009

The year was the best in many years for borrowers as interest rates eased.

2009 was mostly bad news for countries,governments and individuals in terms of economic prosperity,but the year was the best in many years for borrowers as interest rates eased.

Much to the delight of borrowers,home and car loan rates came down to as low as 8 per cent,the lowest in six years,during the year.

As early as February,2009,the country’s largest lender State Bank of India introduced special home loan scheme offering loans at eight per cent and by the end of the year,other big names such as HDFC and ICICI Bank had joined the rate war. The winner,however,was the borrower.

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Even car loan rates came down to 8 per cent from as high as 14 per cent in some cases.

Those who were in the habit of saving,however,suffered a rude shock when peak deposit rates fell in a phased manner by 400-600 basis points.

As far as Reserve Bank’s policy rates were concerned,they remained at the lowest level as part of an effort to perk up economy.

The repo rate,the rate at which banks borrow from RBI in exchange of government bonds,was at 4.75 per cent,reverse-repo at which the apex bank accepts deposits from banks at 3.25 per cent and Cash Reserve Ratio (CRR),the portion of cash banks park with the Reserve Bank,at 5 per cent.

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