Joining the interest rate war, the country's largest bank, State Bank of India, on Friday slashed the interest rate on housing loans by 0.75 per cent across the board with effect from Saturday.

While removing the slab of up to five years, SBI would now charge an interest of nine per cent and 9.25 per cent on floating and fixed basis respectively for loans up to 10 years, a top SBI official said in Mumbai.

Last month, the ICICI initiated a round of interest rate cut, reducing it by 0.5 per cent on housing loans up to five years.

Earlier in the day, SBI chairman A K Purwar had said that they were examining the possibility of a rate cut on housing loans as also considering reduction in some other loans before the Budget (February 28).

For loans of tenure 10-20 years, SBI rate has been reduced to 9.5 per cent on floating basis and 9.75 per cent on fixed basis, he said.

The interest to be charged for up to 10 years' loans in floating category is 2.25 per cent below the State Bank Medium Term Lending Rate and 1.75 per cent below SBMTLR in case of 10-20 years, he said.

The bank was considering to provide some relief to the existing housing loan borrowers, the official added. The processing fee of 0.5 per cent has also been waived till March 31, 2003.

In the current fiscal, SBI has already reduced the housing loan rates three times (July, August and November).