Union Bank of India, on Thursday, said it had slashed interest rates on vehicle loans in the range of 1.55-2.55 percentage points and brought them to a flat 10.95 per cent on zero to seven-year tenor with immediate effect.

The move follows a similar decision by other State-run banks such as the State Bank of India (SBI) and Indian Overseas Bank (IOB).

Earlier, the rates offered by Union Bank were 12.5 per cent for 0-3 years and 13.5 per cent for 3-5 years, a release from the bank said.

The bank has also extended its ‘The Independence to Republic Day festive offer’ on vehicle loans by waiving processing fees during this period.

“The reduction in interest rates and the festival offer will boost the bank’s retail portfolio,” Union Bank CMD D. Sarkar said. Earlier, Union Bank had reduced home loan rates to 10.5 per cent besides waiving 0.5 per cent processing fee on loan amount.

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