State Bank of India, the country's largest lender, on Wednesday slashed its benchmark lending rate by half a percentage point to 11.75 per cent that would benefit home, car and corporate loan customers.
The Benchmark Prime Lending Rate (BPLR) was revised down by 50 basis points effective June 29, SBI informed the Bombay Stock Exchange.
The BPLR of the bank currently stands at 12.25 per cent. The bank last reduced the BPLR by 75 basis points with effect from January 1, 2009.
The decision of the market leader would prompt other lenders to follow suit and may lead to greater demand for loans and spur consumption.
In order to bring down the cost of funds, SBI had reduced deposit rates by 25 basis points across all maturities earlier this month.
For a tenure of 181 days to less than one year, the rate was reduced from 6.50 per cent to 6.25 per cent while for one year to less than 2-years, it was cut from 7.25 per cent to 7 per cent.
For two-years to less than 1,000 days, the new rate is 7.25 per cent against 7.50 per cent, while for a 1,000-day tenure, the rate has been reduced from 7.75 per cent to 7.50 per cent.
SBI's rate cut comes within a fortnight of Finance Finance Minister Pranab Mukherjee asking state-owned banks to soften rates.