TNN

New Delhi, Nov 7: Measures initiated by the RBI will finally translate into cheaper home and car loans, besides other consumer loans, as public sector banks slashed interest rates.

State Bank of India cut its benchmark prime lending rates (BPLR) by 0.75 percentage points, from 13.75% to 13%, on Thursday, as did Oriental Bank of Commerce. Other public sector banks — Bank of Baroda, Bank of India, Canara Bank, Allahabad Bank, Indian Overseas Bank, Syndicate Bank and Dena Bank among others — announced a similar rate cut on Wednesday. Citibank too cut its PLR by 50 basis points, to 15%. This will lead to reduction in both fixed as well as floating rate home loans.

Home loan, car loan and other loans like personal/consumer will become cheaper as most of the public sector banks, including the State bank of India, Oriental Bank of Commerce, Bank of Baroda, Bank of India, Canara Bank, Allahabad Bank, Indian Overseas Bank, Syndicate Bank and Dena Bank among others, have cut their benchmark prime lending rates (BPLR) by 0.75 percentage points to 13% from 13.5%.

Among foreign banks, Citibank has reduced its benchmark prime lending rate by 50 basis points to 15%.

In a statement, SBI said that the bank has lowered its BPLR by 75 basis points (100 basis points is equal to one percentage point) to 13% per annum effective from November 10, 2008. The bank also reduced its deposit rate by 50 basis points for maturities of 91 days to up to five years and by 25 basis points for maturities of five years and over — effective from December 1.

This will lead to reduction in both fixed and floating home loan rates by 75 basis points. Now, the fixed rate will come down to 12% on loan up to Rs 30 lakh and to 13% on more than Rs 30 lakh.

In case of floating rate, existing customers are also set to pocket some gain. The interest rate for them will come down by 75 basis points. Now, the floating rate for up to Rs 30 lakh loan of 15 to 25 years will come down to 10.25% from 11% and on more than Rs 30 lakh to 11.5%. On the home loan amount of less than Rs 30 lakh for up to 5 years, the rate has come down to 9.75% from 10.5%. However, the rate on the loan up to Rs 30 lakh for 10 to 15 years will come down to 10%.

This will translate into lowering of equated monthly instalment (EMI) on Rs 50 lakh loan for 20 years by Rs 2,527 to Rs 49,082.

The lending and deposit interest rate cuts by government-owned banks follow their assurances to finance minister P Chidambaram on Tuesday that they would cut rates as RBI slashed key rates to lower the cost of funds for commercial banks.