Monday brought happiness with State Bank of India declaring that it would slash car loans to 11.25 per cent while 200 basis points would be cut for small and medium enterprises.
India’s largest bank by assets would now become the cheapest car loan provider in the country and would be ahead of HDFC Bank offering 11.50-12.25 per cent and ICICI Bank lending at 11.50- 14.75 per cent.
The nationalized bank kept mum for almost a week after Reserve Bank of India lowered its repo rates by 0.5 per cent, the previous week. The lowering of repo rates by 0.5 per cent surprised markets as they were expecting a drop of 0.25 per cent.
However, the largest ATM network holder said that it will not drop the base rate at once for the buyers. Base rate is described as minimum rate that can be offered to buyers.
A cut of 200 basis points for small and medium scale enterprises was also necessary as they add up to to about 15 per cent of the total loans of the bank.
One basis point is one hundredth of a percentage point.
With the loan rates slashed, the middle class buyers can now head towards their respective car dealers and book their favorite car at an affordable interest rate from their very own bank, SBI.