The State Bank of India (SBI) has cut interest rates on all personal loans across the specturm by 100 to 300 basis points (one basis point is one hundredth of a per cent). The objective is to push retail loans, the hottest product on the finance street.
It has cut the vanilla personal loans, which can be availed for any purpose, by 150 basis points, while the interest on car and two-wheeler loans has been slashed by 100 basis points from 14 per cent to 13 per cent. It has also eased terms and conditions besides doing away with processing fees on car loans.
"We see the retail segment is less volatile and more rate-sensitive. Beside, we can also ensure the end use of loans in this segment. The thrust is on retail loans and we plan to use 9000-odd branches to push for these loans," chairman Janki Ballabh said. Even though the large corporates are not lifting bank loans, small and medium enterprises and traders are accessing loans, Ballabh said.
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The rates of interest for loans against RBI Relief Bonds and shares and bonds have also been reduced to 12 per cent and 14.5 per cent, respectively.
The term loans against mortgage of property will now cost 14 per cent, down from 16 per cent, while the demand loans sanctioned by SBI against the security of National Savings Certificates (NSCs) and Kisan Vikas Patras (KVPs) will be cheaper by 300 basis points at 12 per cent. Loans against Indira Vikas Patras (IVPs) is pegged at 13 per cent as against 15 per cent earlier.
Loans against the security of 'surrender value of LIC policy' has been reduced by 200 basis points to 13 per cent while the loans against the life insurance policies of SBI's subsidiary SBI Life will be at 12.25 per cent.
SBI has rationalised by 100 basis points to 14 per cent interest rates on loans against security of gold ornaments.
The bank, which is charging 11.5 per cent floating rating and 12-12.5 per cent interest on fixed-rate housing loans, has recently launched the 'short term housing loan scheme' for customers who would like to repay the loan in a shorter span of up to five years. The interest on short-term housing loan is 11 per cent and 11.25 per cent for floating and fixed rate loans, respectively.