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SBI cut interest rate on home loans of up to Rs30 lakh to 10.25% while the new car loan would be available at an interest rate of 10.75% for seven year loan
New Delhi: State Bank of India (SBI) has slashed lending rates on car and home loans by up to 0.5%, a day after 1% cut in SLR by the Reserve Bank of India (RBI), reports PTI.
SBI has reduced interest rate on home loans of up to Rs30 lakh to 10.25% from existing 10.50% (after 0.25% concession over the card rate), a senior bank official said.
On the home loans of beyond Rs30 lakh but less than Rs75 lakh, the new rate will be 10.40% against the existing 10.75%, down 0.35%.
The new rates will be effective from 7th August, the official added.
The base rate or minimum lending rate of SBI stands at 10%. Base rate is the benchmark rate below which a bank cannot lend.
With regard to the car loan, the reduction is to the extent of 0.5%. The new car loan would be 10.75% against the existing rate of 11.25% for a seven-year loan.
Now for every Rs1 lakh, a customer has to pay Rs1,699 EMI against Rs1,725 per month earlier. SBI claimed this as the lowest EMI. With the reduction, a borrower would end up saving Rs312 per year on every one lakh.
on Tuesday, RBI in its quarterly monetary policy review reduced statutory liquidity ratio (SLR), the amount of deposits that have to be invested in government bonds and other liquid assets, by 1%.
RBI Governor D Subbarao cut SLR to 23%, thereby releasing around Rs68,000 crore of additional liquidity into the system, even as he left all the key interest rates unchanged in the anti-inflationary stance.
Soon after the policy review yesterday, SBI had hinted at lowering lending rates to retail customers.
"The one percentage point reduction in the SLR will release an additional Rs10,000 crore for SBI. That coupled with Rs6,500 crore released through the reduction in export refinance, may lead the bank to cut lending rates in retail," Chairman Pratip Chaudhuri had said.
It is always better to deploy money at 10.50% return than the average of 7.5% which the SLR gives, Chaudhuri had said.