Now, SBI auto loan @ 8% in first year

Written by fe Bureau | Mumbai | Updated: Jun 28 2009, 07:42am hrs
Continuing its drive to push credit offtake with special rates, State Bank of India (SBI) on Saturday lowered its auto loans to 8% for one year with effect from July 1.

Targeting Rs 13,000 crore of exposure in the current fiscal, the bank has frozen its auto loans at 8% for the first year and 10% for the second and third years. The bank is also working on introduction of similar schemes in other segments in the near future, according to a senior official of the bank.

Equated monthly installments (EMI) for a SBI car loan for Rs 1 lakh will be as low as Rs 1,559 in the first year and Rs 1,647 in the second and the third years.

Earlier this year, the countrys largest lender effected similar measures in the home loan and education loan segments.

Under the SBI Ezee Car Loan Scheme, borrowers can get loans from the bank at 8% for the first and at 10% fixed for the second and third years. The interest rate will be reset from the fourth year at the card rate contracted as on the date of sanction, depending on the tenure of the loan.

SBI car loan card rates are 25 to 75 basis points below the banks prime lending rate. The scheme comes with full processing fee waiver during the period to make it cheaper for the car buyers and is valid until September 30, 2009. The bank has entered into strategic tie-ups with Maruti Suzuki and Tata Motors and financing arrangements with all major car manufacturers, including Hyundai Motors.

Talking to FE, a senior official of the bank said SBI is looking at increasing its credit offtake in the auto loan segment and achieving Rs 12,500-13,000-crore exposure by the end of the current fiscal. The bank had Rs 9,700-crore auto exposure in the last fiscal.

Also, SBI is trying to bring its NPA into the auto loan segment to zero level from the currently existing 3.1%.