SBI reduces lending rate by 25 bps

In a move that will make housing and car loans cheaper, State Bank of India (SBI), India’s largest commercial bank, has slashed the prime lending rate by 0.25 per cent to 12.50 per cent. The reduction has come on the eve of the meeting of finance minister P Chidambaram with heads of public sector banks for a review of the banking sector in New Delhi on Tuesday.

“The benchmark Prime Lending Rate (PLR) is revised downward by 0.25 percentage point from 12.75 per cent to 12.50 per cent with effect from February 16,” SBI said in a statement. The reduction in PLR is likely to moderate lending rates for all category of borrowers, including housing (floating rate), corporate, car loans etc.

The decision follows the up to one per cent cut in housing and consumer loan rates announced by Canara Bank and Allahabad Bank. HDFC and PNB Housing Finance too had reduced their interest rates on housing loans. While HDFC reduced its RPLR by 25 basis points (bps) effective February 1, PNB Housing Finance slashed the rates by 50 bps.