In a dose of relief to millions of existing and prospective borrowers, country's largest bank SBI today announced a 75-basis point cut in its prime lending rate which will make its home, auto and other loans cheaper.
The bank has cut the prime lending rate (PLR)-- the benchmark banks use to decide on their lending rates-- by 0.75 per cent to 12.25 per cent, a statement by the State Bank of India said. The cut in BPLR will be applicable to all existing and new floating rate loans, it further said. The new rates will be effective from January 1.
"The cost of funds has come down significantly as enough liquidity is available in the system at present. Moving ahead, I expect that the cost of funds will come down further," SBI's Chief Financial Officer Ashok Mukand told PTI here.
A lower interest rate regime will make the projects more viable for small and medium sized companies and SBI expects the credit demand to go up with the current reduction in its rates, Mukand said.
It has also effected a 0.25-1 per cent reduction in its deposit rates across various maturities.
With the revision, 1-2 year deposit rates will now attract an interest rate of 8.5 per cent as against the earlier 9.5 per cent while deposits having two years to less than 1,000 days maturity will attract a 8.75 per cent (9 per cent), the bank said in a release here.
Similarly, the 1000-days special deposit scheme, which had offered 10 per cent rates earlier, will now give 9 per cent to investors, SBI said.