Festive offer on loans: SBI, ICICI cut new home loan rates

The country's largest and second-largest lenders—State Bank of India and ICICI Bank—have lowered interest rates on various loans including new housing loans. SBI has also cut interest rates on some term deposits. The move comes a few days after the FM asked banks to cut interest rates.

Despite the reduction, SBI does not appear to be taking a view on the direction of interest rates. SBI's proposed rates fall under a festival offer applicable to all new loans sanctioned on or after Monday and are valid till December end. The special offer comes ahead of Dussehra and Diwali, festivals that see a surge in home and automobile purchases.

As part of the festival offer, SBI has reduced interest rates on all new home, car, two-wheeler and personal loans. Home loans are now cheaper by 0.50-1%, depending on the maturities and amount. The bank also offers a discount if it holds the salary account and more discount if a higher margin is available.

ICICI has also cut rates marginally by 25-50 basis points on home, car and personal loans, as part of its festive offer. On home loans, the rate cut is only for floating loans. But it has not cut rates on deposits.

As for SBI, it has slashed the interest rate from 10.75% to 10% for home loans up to Rs 20 lakh with a tenor of up to five years. For loans between five and 15 years, the rate cut is at 10.25% from the earlier 11.25% .

For 15-20-year tenors, the rate has dropped from 11.25% to 10.5%. For loans over Rs 20 lakh, the rate cuts are 25 bps lesser on comparable tenors.

Similarly, SBI's new car and two-wheeler rates have been slashed by 1%, depending on the loan's amount and maturity. Car loans are now available at 11-12%, depending on the amount, maturity and type of loans. And personal loans are now cheaper by 0.50-1%. Also, the bank is offering a 50% concession in processing charges on all personal loans.

For small road transport operators, SBI has reduced interest rates between 1-2% on existing rates. The applicable rates will now be between 10% and 12.25% for various loan maturities. The festival offer also covers farm mechanisation loans (tractors, power tillers, combine harvesters etc) after a 1-2% interest rate cut with immediate effect.