SBI, the country's largest lender, reduced interest rates on new home, car, truck and farm equipment loans by 50 to 200 basis points from October 8 as a special offer up to December 31 this year and reduced peak deposit rate by 25 basis points to 9 per cent. 

ICICI Bank, the largest private sector lender, has with immediate effect lowered interest rates on floating rate home loans by 50 basis points to 11 per cent and on other retail loans by 25-50 basis points, but there is no change in its peak deposit rate.

KIND CUTS (Festive home loan rates)
SBI Tenure (in years)	5	5-15	15-20
Up to Rs 20 lakh	10	10.25	10.5
	(10.75)	(11.25)	(11.25)
Over Rs 25 lakh	10.25	10.5	10.75
	(11.25)	(11.25)	(11.25)
ICICI Bank	11 (11.5)  all tenures
Figures in % unless indicated. Figures in brackets are old rates

A senior ICICI Bank official said the bank would review the reductions in retail lending rates at the end of this month, after the Reserve Bank of India (RBI) undertakes second quarterly review of its 2007-08 monetary policy. 

 The interest rate cuts come soon after the October 5 meeting between Finance Minister P Chidambaram and chief executives of large banks and representatives from automobile and other industries on ways to boost sagging demand. Chidambaram had urged banks to reduce interest rates so that interest-rate sensitive sectors did not suffer. 

SBI has also cut the interest rate on home loans by 50 basis points with repayment tenures of up to 5 years and by 100 basis points for loans with repayment tenures of over 5 years to 15 years and by 75 basis points for up to a 20-year period. 

"We hope to see a better demand for home loans especially in the 5-15 year category, where the cut is the highest at 100 basis points," a senior SBI official said. 

The reduction in car and two-wheeler loans by SBI is 100 basis points to 11-12 per cent depending on the loan amount and repayment period, and on personal loans is 50-100 basis points. 

The cut in interest rates for small road transport operators and farm mechanisation loans is much sharper. Loans to small truck operators and for tractors, power tillers and other farm equipment have been reduced by up to 200 basis points. The rates for small truck operators would now be 10 to 12.25 per cent depending on loan maturities. 

SBI is also offering further discounts for home loan borrowers who have salary accounts with it and an additional discount if the borrower brings in higher margin, which normally is 20 per cent. 

Several other banks have seen their loan portfolios remain flat over the March 2007 levels and were hoping a general reduction in interest rates would help them grow their advances portfolios.  

ICICI Bank is currently offering the highest interest rate of 9.5 per cent for 390-day deposits. Another public sector lender, Bank of India, recently withdrew its special deposit scheme which offered 9.60 per cent for 400-day deposits.