Mumbai, Feb. 20: The State Bank of India and three other state-owned banks today trimmed their prime lending rates (PLRs), taking a cue from the Housing and Development Finance Corporation, which cut its benchmark rate last month.
The SBI, the countrys largest bank, cut its benchmark prime lending rate by 25 basis points to 12.25 per cent with effect from February 27.
This is the second cut that the SBI is making in less than 10 days. On February 11, it had cut its rate to 12.50 per cent from 12.75 per cent.
Finance minister P. Chidambaram had recently urged banks to cut their interest rates.
Sources said the reduction in the SBIs prime rate was likely to bring down the rates for all category of borrowers, including home buyers, auto buyers and companies.
The Bank of India (BoI), which had brought down its interest rates on consumer, home and education loans on February 11 by 100 to 250 basis points, today said its prime lending rate would be reduced by half a percentage point.
The objectives are to help the productive sectors in bringing down their cost of finance and to stimulate demand for credit, make home loans, auto loans and consumer loans more affordable which will generate more demand for manufactured goods, the bank said in a press statement.
The BoI said after the two rate cuts, housing loans with a floating rate of interest had become cheaper by 75 basis points. The maximum rate applicable now is 9.75 per cent for loans up to Rs 20 lakh. It added that the minimum rate started at 9.25 per cent.
For loans above Rs 20 lakh and up to Rs 50 lakh, the maximum rate is 10.25 per cent. The maximum rate for loans above Rs 50 lakh is 11.25 per cent.
The Union Bank of India revised its benchmark prime lending rate downwards by 50 basis points, from 13.25 per cent to 12.75 per cent effective from February 21. Canara Bank also brought down its benchmark rate by 25 basis points.