Mangalore based public sector bank, Corporation Bank has announced a 100 basis points cut in its interest rates charged for loans to micro, small and medium enterprises.

In a statement issued by the bank, it was mentioned that the bank will reduce interest rates on all existing and fresh credit to micro enterprises by 100 basis points while rates charged on all small and medium enterprises will be cut by 50 basis points.

The bank has also reduced the cash margin in respect of non-fund based limits and margin limits for working capital. In addition, it will consider granting of adhoc working capital limits and re-phasement and restructuring of loans in cases where it is required.

Meanwhile the bank has also declared a downward revision in its home loan rates as per the government's behest. Housing loans of up to Rs 5 lakh with 20 years tenure will offer an interest rate of 8.5% and loans above Rs 5 lakh and up to Rs 20 lakh with 20 years of repayment period will be charged 9.25%, informed Bank's General Manager A Mohan Rao.

The new interest rates are valid for home loans being offered for a limited period from December 17th 2008 to June 30th, 2009.

The margin money charged by the bank for loans up to and including Rs. 5 lakh will be 10% and for loans above and including Rs 20 lakh, the margin will stand at 15%. However processing fee and pre-payment penalty will not be levied on these loans.

Home loan rates reduction by most public lenders is expected to induce private banks to follow the suit.