New Delhi: State-owned Punjab National Bank (PNB) slashed interest rates on home loan and car loans by up to 0.5 percent.

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

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 75 lakh would now attract an interest rate of 10.50 percent or the base rate. Earlier, the interest rate was base rate plus 0.25 percent amounting to 10.75 percent, PNB said in a statement.

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

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

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

Last month, another public sector lender Central Bank of India had announced it will cut interest rates on housing and other loans by up to 0.5 percent from September 1.

Last week, Corporation Bank slash interest rates on home, car and educational loans for a limited period of three-month. The bank also decided to waive the processing fee for these loans.

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