State Bank of India (SBI), country's largest bank gave another boost to borrowers by offering home loans starting at 8.30 percent and auto loans at 8.70 percent.
In a bid to push retail loans, SBI cut both home loan and auto loan rates by 5 basis points or 0.05 percentage points. Rates have been reduced by 5 bps point in all the brackets (all tenures).
With this reduction, SBI's offering in home loan is the lowest in the market. The new rates will be effective from November 01, 2017, SBI said in a statement on Thursday.
The effective interest rate for all eligible salaried customers will be 8.30 percent per annum for loans upto Rs 30 lakh. SBI has cut the rates first time in 10 months.
For car loan customers, the loan amount ranges from 8.70 percent per annum to 9.20 percent per annum compared to earlier range of 8.75— 9.25 percent.
The exact rate depends on the amount of loan and the credit score of the individual, it added.
Other lenders including HDFC Ltd, ICICI Bank, Axis Bank and LIC Housing Finance among others are offering home loans at 8.35 percent.
Over and above of 8.30 percent rate, an eligible home loan customer can also avail of an interest subsidy of Rs 2.67 lakh under the Pradhan Mantri Awas Yojana scheme, the bank said.
This comes a day after SBI reduced the benchmark lending or the marginal cost of funds based lending rate (MCLR) by 0.05 percent across maturities.
MCLR is the minimum rate below which banks cannot lend to customers. The bank went ahead with the MCLR cut after a gap of 10 months.
SBI had last cut the rate on January 1, 2017 after it was flush with deposits post demonetisation.
Speaking on the reduction in the rate, P K Gupta, MD, Retail and Digital Banking, SBI said “ With this reduction in rates, we are offering lowest rates for most of our product offering in the retail loans. Lower rates along with wide distribution network and use of digital technology to enhance customer experience is a perfect package for any retail loan customer.”
This move by SBI is also likely to encourage other banks to cut the MCLR.
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