SBI has made the decision to lower the home loan repayment rate, marking a shift after months of rising EMIs. This reduction follows a collective initiative by four public sector banks, spearheaded by SBI, which have decided to further decrease their prime lending rates by approximately 0.25% to 0.50%. The new prime lending rate (PLR) announced by SBI will be set at 12.25%, taking effect from February 27. Simultaneously, Canara Bank, Bank of India, and Union Bank have also adjusted their PLRs down to 12.75%.
Individuals seeking home loans, along with those in search of car loans, are now in a position to negotiate more favorable terms. This development is anticipated to significantly lower the cost of borrowing for businesses as well.
Industry experts have indicated that such a move was expected. In recent quarters, there has been a noticeable decline in bank lending, a trend attributed to the RBI raising interest rates as a measure to control inflation. Currently, the credit-to-deposit ratio, which once stood at a high of 90%, has now fallen to 55%. With borrowers holding back, banks find themselves with an abundance of funds. Bankers are keen on encouraging individuals and businesses to take loans, as this would offer a boost to economic growth.