The employees under West Bengal state government will soon get to avail soft car loans as banks are bargaining with the state government to offer discounted loans to the employees.

The West Bengal government has received proposal from United Bank of India (UBI) to extend car loans at discounted rates. Even the West Bengal State Cooperative Bank (WBSCB) is going to offer soft car loans to the employees of the state government.

The development regarding offering soft car loans have been confirmed by the officials of both the bank.

The banks are taking such a move in order to get hold of customers who have recently been benefited by the salary hikes and their disposable income has increased significantly.

UBI plans to offer car loans at 100 basis points concession to the people employed with the state government for more than 2 years. Presently the bank is offering car loans at 10% for the first year under a special scheme that is valid until June 2009. Therefore if the government approves UBI's proposal, state government employees would be able to avail car loans till June at 9% for the first year.

The normal car loan rates for UBI stand at 12% for loan with up to 3years tenure while car loans with repayment tenure of over 3 years are extended at 12.5%. So employees who plan to take the loan after June would get 1% discount on these rates.

On the other hand WBSCB has not yet declared any rate for the state government employees. But the bank's Chairman Samir Ghosh said these set of people would get around 200 basis points concession on the interest rate for car loans.

Currently the car loan rate of WBSCB stand fixed at 12% a year. The bank also offers housing loans at 2% discount to state government employees. "The government has requested us to devise a car loan scheme too for its employees. We have agreed to offer soft loans to them. But details of this are being worked out," said Ghosh.

However the guarantor against these car loans would be government and therefore WBSCB do not have any issues in offering loans at significantly lower rate than the regular rates.

There are around 10 lakh employees working under the West Bengal state government who would be able eligible for the discounted car loan rates.