State Bank of India (SBI) said it has linked all small and medium enterprise (SME) loans with the base rate, which became effective on Thursday.
SBI has linked all the new SME loans disbursed from July 1 to the base rate, with effective interest rate continuing at the existing level, SBI said in a statement.
Base rate, the lowest interest rate that banks can charge from a customer has replaced the benchmark prime lending rate (BPLR) system after the RBI directive last week.
SBI has fixed the base rate at 7.5 per cent, much lower than BPLR rate of 11.75 per cent that it charged before the base rate became effective this month.
The effective interest rates for all existing SME loans will remain unchanged, it said. The loan given to SME sector depending on various conditions varies in between 8.5 per cent to 12 per cent.
The interest rates will remain valid until further notice or unless the base rate is revised in the meantime, it added. Meanwhile, the bank has extended its 8 per cent concessional home loan scheme for another three months till September, 2010.
For the first year, home loan would carry eight per cent interest rate and for the second and third years it would attract nine per cent rate.
From the fourth year onwards, the rate is linked to base rate, and the effective rate is 9.25 per cent for loans upto Rs 50 lakh and 9.75 per cent for loans above Rs 50 lakh at present.
Car loan is also available at 8 per cent concessional rate and 10 per cent fixed for the second and third years.