Following its parent bank - State Bank of India, the State Bank of Mysore, reduced its lending rates by 50 basis points to 12.25 percent, with effect from June 29, 2009.
The State Bank of India announced reduction in its Benchmark Prime Lending Rate (SBAR) by 50 bps on Wednesday, 24 June 2009. The revised rates at 11.75 percent p.a. would come into effect 29th June 2009 onwards.
The reduction in the lending rates by PSBs comes within weeks of Union Finance Minister Pranab Mukherjee asking the PSBs to soften interest rates. Though following this, several banks lined up to reduce the deposit rates, the reduction in lending rates came only recently. Banks have been apprehensive about BPLR cuts, considering the inverse effect of same on their net interest margin.
It is considered that other banks will trail the move. Currently, PNB has pegged its benchmark rate at 11percent, which is the lowest in the industry. It is expected that reduction in rates will help in inducing demand and spur the consumption.