Axis Bank, the third largest private sector bank, has reduced interest rates on car

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loans by 50-75 basis points (bps) following a similar reduction in the rack rates by the largest private sector bank, ICICI Bank.

Axis Bank did not disclose the exact level of interest rates now compared with the earlier rates of 10.5 to 11 per cent. The new rates will be 50-75 basis points lower than the rates that prevailed till now, said Manju Srivatsa, president of retail banking, Axis Bank.

ICICI Bank declined to confirm the reduction in interest rates on its car loan products but industry sources said the bank has reduced rates by 25-75 basis points with the lowest rate being 9.5 per cent. An ICICI Bank spokesperson said, "Our auto loan rates are in line with competition and payout (commission to dealers for sourcing clients) are at an average of 2 per cent, which is also in line with the competition.”

Axis Bank's Srivatsa said the decision to reduce interest rates was based on customer research and interactions, as well as market feedback and the bank felt this was the appropriate time to offer new rates to customers. "We are hopeful that our new offering will not only benefit car buyers in terms of lower interest rates but also provide them an enhanced car-buying experience without putting brakes on their ambition,” she added. Axis Bank's car loan portfolio has grown at 30-35 per cent this year so far and its total car loans outstanding amounted to around Rs 3,000 crore.

Axis Bank also recently introduced AXIS ADVANTAGE, an exclusive forum for selected car dealers, where the bank would run exclusive schemes and introduce attractive incentives for member dealers. In addition, the dealers would be offered lifestyle privileges from the bank and would be eligible for exclusive joint promotional campaigns with the bank.