New Delhi, Oct 9 (PTI): State Bank of India, the country’s largest bank, on Wednesday reduced its interest rates on loans for cars and consumer durables and also decided to lower processing charges to ride the festival season demand.
SBI is the fourth bank after Punjab National Bank, Oriental Bank of Commerce and IDBI Bank to offer special interest rates for loans to buy automobiles and consumer durables such as televisions, air conditioners and refrigerators.
The decision to cut interest rates on auto and consumer durable loans comes nearly a week after the government decided to pump in funds in PSU banks so that they can lower rates to stimulate demand in the targeted sector.
SBI said interest rate on car loans has been lowered to 10.55 per cent against the earlier 10.75 per cent.
“Processing charge has also been cut from 0.51 per cent of the loan amount with a minimum of Rs 1,020 to a flat rate of Rs 500,” it said.
The bank has also launched a special festival loan for its salary account holders for purchase of consumer durables and two-wheelers.
Attractive discounts are available under this offer resulting in effective interest rates starting from 12.05 per cent, it said.
This 'Utsav Ki Umang SBI ke Sang' offer is valid from October 7, 2013, to January 31, 2014, and covers the purchase of cars, two-wheelers and consumer durables, it added.
Last week, the government had decided to provide additional funds to the PSU banks to enable them extend more credit to auto and consumer durables sectors to stimulate demand and combat slowdown.
The decision to infuse more capital was taken at a meeting between Finance Minister P Chidambaram, RBI Governor Raghuram Rajan and Economic Affairs Secretary Arvind Mayaram.
“This amount (Rs 14,000 crore provided for capital infusion in Budget) will be enhanced sufficiently. The additional amount of capital will be provided to banks to enable them to lend to borrowers in selected sectors such as two-wheeler, consumer durables, etc at lower rates in order to stimulate demand,” a finance ministry statement had said.
The fund infusion would help in combating slowdown and boost output, it had added.