SBI reduces prime lending rate by 0.75%

Loans from premier public sector lender, State Bank of India, will be cheaper with the bank deciding to cut its prime lending rate by 0.75 per cent from Monday.

Accordingly SBI's PLR will stand reduced to 13 per cent from the present 13.75 per cent, bank's Chairman O P Bhatt said on Thursday.

SBI being the largest lender, more banks are expected to follow suit by this week-end.

Several public sector banks such as Punjab National Bank, Union Bank, UCO Bank and Syndicate Bank, have already effected a cut in their PLRs.

On Tuesday, Finance Minister P Chidambaram met heads of PSU banks following which bankers had promised to cut their lending rates by up to 0.75

per cent.

On Wednesday, finance secretary Arun Ramanathan also got assurance from private sector and foreign banks that they would consider an interest rate cut in a fortnight.

The earlier hardening interest rate cycle is getting reversed after RBI eased money supply to spur growth in the wake of global financial crisis, which has some effect on the Indian economy.

The Reserve Bank had slashed its reserve ratios and short-term lending (repo) rate to inject over Rs 2,60,000 crore (Rs 2,600 billion) into the system.