HDFC cuts lending rate to 10.5pc

India's leading housing finance company, Housing Development Finance Corp (HDFC), has reduced its retail prime lending rate (RPLR) by 0.5 per cent from 11 per cent to 10.5 per cent with effect from today.

HDFC has also dropped its lending rates on its fixed rate loans. The revised rates on fixed rate basis will now be 9.75 per cent for a 5 year tenure, 10.25 per cent for loans with a tenure between 6 to 10 years and 10.75 per cent for a 11 to 20 year tenure. All these above rates are on an annual rest basis.

During the current financial year, HDFC has been actively restructuring its liabilities and re-pricing its debt in line with the lower interest rate regime.

In July 2002, HDFC issued floating rate notes (FRN) for an amount of $100 million in the international markets at very fine rates.

Through active foreign exchange risk management mechanisms, HDFC has been able to achieve a cost of borrowing which is significantly lower than the cost of borrowing for a comparable tenor from domestic markets.

On August 5, 2002, for the second time during the current financial year, HDFC had reduced its retail deposit rates by 0.25 to 0.50 per cent on varying maturities. HDFC has effected a 250 basis points reduction in its deposit rates since April 2001.