State Bank of India, on Saturday, announced a reduction in lending rates by 0.25 per cent for those who availed themselves of loans before July 2010.

The bank’s new benchmark prime lending rate (BPLR) has been set at 14.5 per cent. The new rate will be effective from September 27.

Earlier on September 18, the bank had cut the minimum lending or base rate by a similar percentage. The base rate mechanism came into effect in July 2010 as a new transparent alternative to the earlier benchmark prime lending rate. Of the Rs. 7.81 lakh crore domestic loan book (advances), around Rs. 1 lakh crore was on the BPLR, SBI Chief General Manager for Finance Control Sunil Pant said. As on June 30, 2012, the bank’s total loan book stood at Rs. 9.59 lakh crore, which includes foreign loans and loans to staff.

Asked about the impact on margins, he said the annual impact would be under Rs. 250 crore in terms of interest income, and as the current fiscal was halfway through, the impact on the margin would be a minuscule 0.01 per cent. The impact of the base rate cut on the margins would be around 0.04 per cent.

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