State Bank of India has pared its minimum lending rate from 9.75 per cent to 9.70 per cent.
This move comes a day after the Reserve Bank of India cut its key policy rate and the cash reserve ratio by 25 basis points each.
However, India’s largest lender left deposit rates unchanged. This can be attributed to the challenge the banking system is facing in garnering deposits as savers are buying gold and investing in mutual funds.
SBI’s new minimum lending rate, also known as base rate, will be effective from February 4.
All loans linked to the base rate, including home loans, will be become a tad cheaper, said a senior official.
“Our deposit rates are already the lowest. Hence, we left them unchanged,” said the official.
HDFC Bank cuts auto loan rates
HDFC Bank has reduced interest rates on auto loan by up to 50 basis points without altering its base rate, which is currently at 9.70 per cent. The interest rate on car loans has been cut by 25 basis points to the 10.50-11.50 per cent range.
The bank’s two-wheelers loans will be cheaper by 50 basis points and will be available at 19.25-22.25 per cent.
India’s second largest private sector bank reduced the commercial vehicle loans by 25 basis points. Loans for heavy and light commercial vehicle will be available at 11 per cent and 13.75 per cent, respectively.
HDFC Bank’s new auto loan rates will be effective from February 1, a bank official said.
Federal Bank also slashed its interest rates on auto loans to 10.45 per cent from 11.20 per cent. The Kerala-based old generation private sector bank expects its loan disbursements to increase to Rs 100 crore in the next two months.
On Tuesday, IDBI Bank was the first off the block to cut base rate as well as its benchmark prime lending rate by 25 basis points each.