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SBI freezes car loans at 10 % for one year

Oommen A. Ninan

Slashes lending rate on farm loans to 8 per cent


MUMBAI: On the heels of earlier measures announced by State Bank of India (SBI) for the home loan and small and medium enterprises (SME) segments in early February, it has been decided to offer concessions in interest rates for new car purchasers and farmers.

SBI has decided to freeze the interest rates on new car loans for one year at 10 per cent annually.

Interest rate will be reset after the freeze period at the applicable card rate contracted as on the date of sanction under the respective new car loan schemes.

The SBI car loan scheme offers the longest repayment period of up to 84 months without any advance EMI (equated monthly instalment).

“SBI calculates interest on loans on daily outstanding balance, which reduces the interest burden on the borrower as against the monthly outstanding balance basis or the flat rate basis as charged by few others,” the bank said in a release The new car loans will be on offer from February 23 until May 31 across India and the interest rate will be reset on these loans at the contracted rate after June 1, 2010.

Package for farmers

In a bid to save farmers from falling prey to distress sale of their farm produce, the bank has decided to reduce the rate of interest for loans to farmers against cold storage and warehouse receipts to 8 per cent annually with immediate effect.

These loans, till now, were being charged interest ranging from 10.5 per cent to 14.25 per cent, depending on the quantum of loan sanctioned. The loans will be made available to farmers, irrespective of whether the farmers were given crop loans for raising the produce or not.

The 8-per cent interest announced will be at fixed rate for 12 months in respect of loans sanctioned and disbursed till the end of May.

The package is being implemented pan-India, the release added.

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