SBI and Allahabad bank reduced interest rates

The two public sector banks State Bank of India India's largest lender and Kolkata headquartered Allahabad Bank has reduced their interest rates for new loans to micro, small and medium enterprises by 1 percent. The new rates will come into effect immediately in line with the special package announced by the Reserve Bank of India and India Banks' Association.

State Bank of India has reduced interest rates on working capital loans to micro, small and medium enterprises by 0.5-1 per cent to be effective from 16 December. The State bank release stated, “With this reduction, the micro enterprises will be able to avail working capital finance at as low as 10.25 per cent”. Bank sources informed the reduction in rates will be applicable for small firms with working capital limits up to Rs 10 crore.

However Allahabad Bank said that new interest rates will be applicable for all existing and new loans to micro industries and has been reduced by 100 basis points. Whereas interest rate for small and medium enterprises with fund based exposure up to Rs 10 crore has been reduced by 50 basis points.

Allahabad Bank has also taken a decision of reducing interest rates for fresh housing loans up to Rs 20 lakh for a maximum tenure of 20 years to be available from the bank till 30 June 2009. The bank release stated, "The revised rate of interest for a loan up to Rs 5 lakh will now be 8.5 per cent (fixed) and for loan over Rs 5 lakh to Rs 20 lakh, the interest rate will be 9.25 per cent (fixed)".