SBI to cut interest on education loan

State Bank of India (SBI) has taken in-principle decision to slash interest on education loans by up to 1 percentage point. “The bank has taken in-principle decision to cut (interest on) education loan,” SBI Managing Director and Chief Finance Officer Diwakar Gupta told PTI.

“Announcement would be made soon. The bank will issue the notification shortly,” he added.

Without giving details of quantum of rate cut, he said, it may be up to 100 basis points.

Interest rates on education loans range from 12.25 per cent to 14.50 per cent, depending on their quantum and the duration.

The education loan book of SBI constitutes under 7 per cent of its Rs 1.75 lakh crore retail loan portfolio. In the quarter ended December, the bank saw its education loan books swell by 14.17 per cent.

SBI is also offering a concession of 50 basis points on interest rates for loans given to female students.

Earlier this month, SBI Chairman Pratip Chaudhuri had said the possibility of a reduction in base rate at this point of time looks bleak as the bank has absorbed last three RBI policy rate hikes without raising its base rate.

The lender’s base rate stands at 10 per cent as of now, which is the lowest in the country.

About the possible slashing of home loan rates, he had said the possibility was “less.”

“The possibility of (reduction) in home loans is less as the rate is 10.50 per cent and the base rate is 10 per cent. Hence, the possibility is less. Moreover, the tenor of a home loan is 25—30 years, (so) we have to think about it a lot,” Mr. Chaudhuri had said.

He, however, had said in case of further CRR cut by the central bank, the entire rate structure will come down.

On January 24, the Reserve Bank had reduced the cash reserve ratio (CRR) by 0.5 per cent to 5.5 per cent to infuse liquidity into the system, and indicated a reversal of tight money policy stance.