RBI in its quarterly monetary policy review reduced Statutory Liquidity Ratio (SLR), the amount of deposits that have to be invested in government bonds and other liquid assets, by 1 percent.

RBI Governor D Subbarao cut the SLR to 23 percent, thereby releasing around Rs 68,000 crore of additional liquidity into the system, even as he left all the key interest rates unchanged in the anti-inflationary stance.

The new car loan would be 10.75 percent against the existing rate of 11.25 percent for a seven-year loan. Now for every 1 lakh, a customer has to pay 1,699 EMI against 1,725 per month earlier. SBI claimed this as the lowest EMI. With the reduction, a borrower would end up saving 312 per year on every one lakh.

SBI has taken this step to get hold of the retail segment as the loan demands from corporates are constantly falling. It can be hoped that this step of SBI will also influence other state-run and private banks to lower their loan rates as well.