State Bank of India today slashedlending rates on car and home loans by up to 0.5 per cent, aday after one per cent cut in SLR by the Reserve Bank.
SBI has reduced interest rate on home loans of up to Rs 30lakh to 10.25 per cent from existing 10.50 per cent (after0.25 per cent concession over the card rate), a senior bankofficial said.
On the home loans of beyond Rs 30 lakh but less than Rs 75lakh, the new rate will be 10.40 per cent against the existing10.75 per cent, down 0.35 per cent.
The new rates will be effective from August 7, theofficial added.
The base rate or minimum lending rate of SBI stands at 10per cent. Base rate is the benchmark rate below which a bankcannot lend.
With regard to the car loan, the reduction is to theextent of 0.5 per cent.
The new car loan would be 10.75 per cent against theexisting rate of 11.25 per cent for a seven-year loan.
Now for every Rs 1 lakh, a customer has to pay Rs 1,699EMI against Rs 1,725 per month earlier. SBI claimed this asthe lowest EMI. With the reduction, a borrower would end upsaving Rs 312 per year on every one lakh.
Yesterday, RBI in its quarterly monetary policy reviewreduced Statutory Liquidity Ratio (SLR), the amount ofdeposits that have to be invested in government bonds andother liquid assets, by 1 per cent.
RBI Governor D Subbarao cut the SLR to 23 per cent,thereby releasing around Rs 68,000 crore of additionalliquidity into the system, even as he left all the keyinterest 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 willrelease an additional Rs 10,000 crore for SBI. That coupledwith Rs 6,500 crore released through the reduction in exportrefinance, 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 per centreturn than the average of 7.5 per cent which the SLR gives,Chaudhuri had said.