New Delhi: State Bank of India (SBI) on Wednesday reduced interest rates on loans for car and consumer durables and also decided to lower processing charges to cash in on the festival season demand.
SBI is the fourth bank after PNB, OBC and IDBI Bank to offer special interest rates for loans to buy automobiles and consumer durables like 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.
According to the country's largest bank, interest rate on car loan has been slashed by 0.20 percent to 10.55 percent against the earlier 10.75 percent.
"Processing charge has also been cut from 0.51 percent 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 percent, 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 increase the quantum of capital infusion 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 additional fund infusion would help in combating slowdown and boost output, it had added.