SBI Cuts Home, Auto Loan Rates

On the day P Chidambaram took charge as the Union finance minister, India’s largest lender, State Bank of India (SBI), brought interest rate relief to its new home and automobile loan customers.

The new rates, lower by 25–85 basis points (bps) for home loans and 50 bps for auto loans, will come into effect from August 7, 2012.

The bank, however, is yet to decide on reducing the base rate — the benchmark rate to which all bank loans are linked.

The move comes a day after the Reserve Bank of India (RBI) reduced the statutory liquidity ratio (SLR) — the proportion of liabilities that banks have to invest in government securities — by 100 bps to 23 per cent.

For home loans up to Rs 30 lakh, the reduction in interest rate will be 25 bps, translating into savings of Rs 500 per month for new customers for a 20-year loan.

For loans above Rs 30 lakh and below Rs 75 lakh, the rate reduction is 60 bps. At 85 bps, the rate cut is the highest for home loans above Rs 75 lakh.