The public sector bank, Central Bank of India has announced to slash its lending rates on home loans and car loans segment by about 0.5 percent. The new, reduced rates would be effective from the September 1.

Announcing the rate cut, the Chairman and Managing Director of Central Bank of India Mr. M V Tanksale said, "We have decided to reduce the rate of interest on the car loans. We have decided (to cut)... Housing loan rate by 25 to 50 basis on houses between Rs 30-35 lakh. These will be effective from September 1."

It should be noted that, last week Finance Minister P. Chidambaram had urged public sector banks to reduce their lending rates in order to accelerate credit growth which would accelerate sales of consumer goods and increase growth.

Accepting the finance minister's advice, Mr. Tanksale added, "We all appreciate and agree that there is a necessity for fuelling the growth engine...The best way to fuel the growth engine is to offer some consumer durable loans at a lesser rate."

However, it is reported that the Central bank would not decrease its base rate - the minimum lending rate below banks are not allowed to provide loans.

The bank has decided to cut its interest rates only on a few selected products, by 0.25 to 0.5 percent.