Addressing a press conference on Tuesday, Jun 29, Om Prakash Bhatt, Chairman of SBI, said:"The base rate would be effective from Jul 1."
"Ater a long discussions from the Central Management Committee of the SBI, we desided to pitch somewhere in between 7.5 percent, so that for the future, the rate changes are captured in a more equitable manner for both new customers as well as old customers. This was our logic," he added.
The base rate will be applied when the customer comes for renewal of a loan contract. However, this does not apply to finance companies and they will be continue to fall under the Prime Lending Rate (PLR) while charging interest rates.
The announcement by SBI was followed by four other public sector banks like Punjab National Bank, Bank of Baroda, Union Bank of India and Central Bank of India, who set their base rate at 8 per cent.