Mumbai: India's largest lender State Bank of India (SBI) may slash interest rates on education loans by 25-100 basis points across various maturities, with effect from Monday, February 20, the Press Trust of India reported citing unidentified sources.
Following the move, for an education loan of Rs 400,000, the interest rate will be reduced by 25 basis points to 11.75%; for a loan between Rs 400,000 and Rs 750,000, the interest rate will be cut by 100 basis points to 12.5%; and for a loan above Rs 750,000, the interest rate will be lowered by 25 basis points to 12.25%, the news agency quoted the sources as saying.
The public-sector bank is also offering a concession of 50 basis points on interest rates for loans to female students.
SBI Chairman Pratip Chaudhuri neither confirmed nor denied the report.
"Please wait for a formal announcement," Chaudhuri told the news agency.
Earlier this month, Chaudhuri had said that SBI's asset liability committee will soon revisit its interest rate on loans, thereby raising strong hopes of a downward revision of lending rates after the bank's chief financial officer had also recently expressed keenness on cutting rates.
In January, the Reserve Bank of India (RBI) reduced the cash reserve ratio (CRR) -- the portion of deposits that banks are required to keep with RBI -- from 6% to 5.5%, releasing Rs 320 billion of primary liquidity into the banking system.
However, the RBI kept the key policy rate, or repo rate unchanged at 8.5% for the second time, saying it is premature to cut the same based on the current inflation outlook, reflecting RBI's attempt to balance concerns about stubbornly high inflation and deteriorating economic growth.
Shares of SBI Friday ended at Rs 2,416.75 on the Bombay Stock Exchange (BSE), up 2.88% from the previous close.