4 Indian Companies have it in them to give a huge boost to India's Economy ---

….  if only they will.

These are SBI, HDFC,  LIC Housing Finance and HUDCO.

All these 4 organisation should announce, simultaneously,   a full 1 % cut  from their current levels  in their lending rates for

1.      .    Home Loans
2.           Home repair/refurbishing/furnishing Loans 

for all loans from that date and all outstanding  “Floating Interest Rate Home Loans” prior to that date  and  a 0.5 % cut for all outstanding  “Fixed Interest Rate Home Loans” on that date.

These special rates should be made available for a limited period of say, 6 to 9 months only.  Reason for proposing this limited period is explained below.

Just imagine the explosive impact  this would have on the entire construction/housing sector and the whole economy.  

People’s pent-up demand for homes would now come up to the brim and lead to a huge secondary kick to the economy by way of demand for steel, cement, furniture and furnishings, lights and fittings, kitchen equipment., tiles and ceramics,  in addition,  of course, to  the huge employment demand it would generate in the construction sector which is the biggest employer of unorganized rural labour that migrates form one construction sector to another.

How are Banks/Lenders supposed to make up for this proposed 1 % interest cut – 0.5 % by internal efficiencies (through cutting waste & cost by speedier processing and simplification of processes) and the rest 0.5 % will be more than made up by the surge in business volumes.

To really get this going,  the following must also be done :

Processing charges must be made NIL or reduced to 50% of their current Level for the period of this “reduced interest rate offering”

Pressure (only pressure, no compulsion) should be put on all major Builders to also offer a Flat, across the board cut of 5 % in their rates prevailing as on date.  This will provide a double boost to the entire effort.

The reason for restricting this reduced rate offer to a limited period is to ensure that the economy gets a kick start by people rushing to take advantage of this offer. If this reduction is made open-ended or permanent there will be no “time pressure”  for people to invest and the momentum needed to put the economy into a higher trajectory will not be achieved.

I am hoping that the “powers-that- be”  in these 4 organisations will examine this proposal  and take the next step.  Ball in their Court now.