Credit drive

Mumbai, June 27: The State Bank of India today brought down interest rates on car loans to as low as 8 per cent.

Under the SBI Ezee Car Loan Scheme launched today, buyers can get loans at 8 per cent for the first year and 10 per cent for the second and third year. The scheme will be valid till September 30.

With its latest scheme, the country’s largest lender has sweetened an offer made in February this year when it announced loans at 10 per cent for a period of one year.

The EMI on Rs 1 lakh loan under the new scheme will be as low as Rs 1,559 in the first year and Rs 1,647 in the second and third year.

The interest rate will be reset from the fourth year at the card rate contracted as on the date of sanction, depending on the tenure of the loan.

The card rates are 25-75 basis points below the bank’s prime lending rate (PLR). The bank recently brought down its PLR to 11.75 per cent.

Another attraction of the new scheme is that the processing fee will be waived during the scheme period to make it simple for car buyers.

Senior officials from the SBI said its special offer in February got a strong response from customers. This prompted the public sector bank to improve its interest rate offer and extend it up to September 30.

While private sector banks such as HDFC Bank and ICICI Bank are the major players in the car loan segment, SBI, according to a bank official, is now the largest financier of new cars.

“The SBI is now the largest player in the car loan market and we want to maintain that position. During fiscal 2008-09, we financed the purchase of one lakh cars. It is our expectation that this year, the number will be 2 lakh,” the official said.

The nationalised bank has also announced aggressive offers in other categories like retail. It hopes that its retail portfolio will grow 30 per cent this year, while the auto segment will make up for 34 per cent.