Click Here

Click Here

State Bank of India again reduces lending and deposit rates

The State Bank of India, the country's largest lender has slashed both lending and deposit rates in step with the government's move to ease rates and make credit available. These rate cuts will be effective from 1 January 2009.

The Bank announced a 0.75 per cent reduction in its prime lending rate which will be effective from 1 January 2009. SBI's prime lending rate now stands reduced at 12.25 per cent. This is the second rate cut by the SBI in just over six weeks. On November 10, the public sector bank had trimmed its benchmark rate by the same margin to 13 per cent.

The SBI rate cut will directly benefit its existing floating rate home loan customers. New borrowers will also get the benefits of the reduced rate. The BPLR reduction means that the effective interest on an existing floating rate home loan should come down to 9 per cent for loans up to Rs 30 lakh and a tenure of five years. For loans above five years and up to 15 years, the revised interest rate is pegged at 9.25 per cent. The new rate will be 9.5 per cent for loans with a tenure of 15 to 25 years.

The SBI also announced a reduction in its deposit rates across various tenures by 25 to 100 basis points which will be effective from January 1.

For deposits of 15 days to 45 days, rates have been revised to 4.25 per cent from 4.75 per cent. For deposits of 91-180 days, it now stands at 6.50 per cent (7 per cent), 181 days to less than a year at 7.25 per cent (8 per cent), 1 year to less than 2 years at 9.50 per cent (8.50 per cent), 2 years to less than 3 years at 8.75 per cent (9 per cent).

Interest rates on deposits of 1000-day maturity have also been cut to 9 per cent from 10 per cent earlier. Similarly, the interest rate on three-year to less than five-year deposits has now been fixed at 8.50 per cent from 9.25 per cent earlier.

SBI said that rates are being reduced in keeping with the drop in cost of funds. The reduction in deposit rates will protect SBI's margin, the statement added. SBI said it also expected a further drop in inflation.

SBI's move is expected to push more and more banks in the country into reducing lending and borrowing rates over the next few days.








      Banking | Technology | Finance | Advertise | Terms of use | Disclaimer | Contact us
                         Banknet India | All rights reserved worldwide.