State-owned Punjab National Bank (PNB) on Monday slashed interest rates on home loan and car loans by up to 0.5 per cent.

In the housing loan segment, rate has been reduced by 0.25 per cent while interest rate on car loans has been slashed by 0.5 per cent effective today.

The decision to lower rate comes within days of Finance Minister P Chidambaram asking PSU banks to cut interest rates with a view to boosting sales of consumer goods and promoting growth. The Minister had cited the example of SBI on how EMI reduction boosted the sales of cars.

Home loans of up to Rs 75 lakh would now attract an interest rate of 10.50 per cent or the base rate. Earlier, the interest rate was base rate plus 0.25 per cent amounting to 10.75 per cent, PNB said in a statement.

Similarly, rate has been reduced for home loans above Rs 75 lakh to 10.75 per cent from 11 per cent earlier.

With regard to car loans, three-year loans would now be available at 11.50 per cent against 12 per cent, down by 0.5 per cent.

Car loans above 3 years would also attract 0.5 per cent lower rate at 12 per cent compared to 12.50 per cent earlier, it said.

Last month, Central Bank of India had announced it will cut interest rates on housing and other loans by up to 0.5 per cent from September 1.

Last week, Corporation Bank slash interest rates on home, car and educational loans for a limited period of three months.

The bank also decided to waive the processing fee for these loans.

Interest rates for Corp Home Housing loan for up to Rs 50 lakh is 10.50 per cent. The new rates is 10.75 per cent for loans up to Rs 1 crore and 11 per cent for loans exceeding Rs 1 crore. The bank was earlier charging 11.25 per cent interest on home loans.