NEW DELHI: After cutting its home loan rate by almost 3 percentage points to 8%, the country's biggest bank, State Bank of India has cut its car loan rate also by 1.5 percentage points to 10% under the floating interest rate scheme. The bank also announced massive cuts of up to 6.5 percentage points in interest rates to farmers against their produce, bringing the new rate to 8%.
The reduction in the car loan rate should act as a major boost to the auto industry, which had been facing a slowdown compounded by high interest rates. "As SBI is the leader in the car loan segment, other banks will be forced to follow suit to remain competitive," said a public sector bank chairman.
The new offer, a senior SBI official said, would be for a limited period between February 23 and May 31, 2009.
After that, the rate would be reset to the then prevailing rate on car loans. The official said that at present the bank was offering car loans at 11.5% in the normal course. As the prime lending rate of the bank is 12.25%, the present floating rate on car loans is 75 basis points lower than the PLR. After one year, the interest rate on the car loan borrowed today at 10% will be reset at the then prevailing PLR minus 75 basis points.
In 2008-09 so far, SBI has emerged as the biggest player in the car loan segment financing over one lakh cars. In 2009-10, the official said the bank is aiming at financing 2 lakh cars. The SBI car loan scheme offers the longest repayment period of up to eighty four months (7 years) without any advance EMI.
In the farm loan segment too, SBI has cut interest rates very steeply. In what it said was a bid to save farmers from falling prey to distress sale of their farm produce, SBI has reduced the rate of interest for loans to farmers against cold storage and warehouse receipts to 8% per annum with immediate effect. These loans, till now, were being charged interest ranging from 10.5% to 14.25%, depending on the quantum of loan sanctioned.
Soruce:http://timesofindia.indiatimes.com/Business/Gold-breaches-Rs-16000-level/articleshow/4165792.cms
The reduction in the car loan rate should act as a major boost to the auto industry, which had been facing a slowdown compounded by high interest rates. "As SBI is the leader in the car loan segment, other banks will be forced to follow suit to remain competitive," said a public sector bank chairman.
The new offer, a senior SBI official said, would be for a limited period between February 23 and May 31, 2009.
After that, the rate would be reset to the then prevailing rate on car loans. The official said that at present the bank was offering car loans at 11.5% in the normal course. As the prime lending rate of the bank is 12.25%, the present floating rate on car loans is 75 basis points lower than the PLR. After one year, the interest rate on the car loan borrowed today at 10% will be reset at the then prevailing PLR minus 75 basis points.
In 2008-09 so far, SBI has emerged as the biggest player in the car loan segment financing over one lakh cars. In 2009-10, the official said the bank is aiming at financing 2 lakh cars. The SBI car loan scheme offers the longest repayment period of up to eighty four months (7 years) without any advance EMI.
In the farm loan segment too, SBI has cut interest rates very steeply. In what it said was a bid to save farmers from falling prey to distress sale of their farm produce, SBI has reduced the rate of interest for loans to farmers against cold storage and warehouse receipts to 8% per annum with immediate effect. These loans, till now, were being charged interest ranging from 10.5% to 14.25%, depending on the quantum of loan sanctioned.
Soruce:http://timesofindia.indiatimes.com/Business/Gold-breaches-Rs-16000-level/articleshow/4165792.cms
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