State Bank of India has frozen interest rates at 10 percent for new car loans of one year tenure. The new rates will be applicable to customers and farmers availing car loans from February 23 to May 31, 2009. Once the freeze-period is over the car loans will be again available as per the card rates available on the date of sanctioning. “SBI calculates interest on loans on daily outstanding balance, which reduces the interest burden on the borrower as against the monthly outstanding balance basis or the flat rate basis as charged by few others,” said the bank press release.
Tata Motors has hailed the move and commented that such a step will help to boost the car sales in the country. “We welcome the move. This should help the automobile industry to boost up sales. We hope other banks will also follow suit," a Tata Motors' spokesperson said.
SBI had earlier taken such measures for loans on homes and small and medium scale industries. SBI is the sole booking agent for Tata Nano that is ready to roll out from the Tata Motors’ Pantnagar manufacturing unit in Uttrakhand.