Bank of Baroda has cut the interest rates on some of the car and housing loan (mortgage loan) products by over 0.25 percent with immediate effect. The state-run bank made the announcement on Thursday.

The bank has cut the interest rates during a period when attempts are being made to boost loan growth in the nation, amidst the issue of tariffs. It is expected by experts that this will assist in the economic growth of the nation. Considering inflation, the Reserve Bank of India (RBI) has maintained interest rates unchanged, and the money market too has witnessed an upward movement in yields. Bank of Baroda issued a statement that the action has been taken into consideration with the onset of the festive season.

In the housing loan market, some major banks are complaining about loans being given by competitors at "irrational" rates, due to which they have to slow down the pace of expansion of their book. Bank of Baroda Executive Director Sanjay Mudaliar said that with the cut in interest rates, their mortgage offering has now become more competitive.

The bank said that the floating car loan interest rate will now start from 8.15 percent, up from 8.40 percent earlier. The bank said that the competitive car loan offer can be availed in case of buying a new car, and the loan rate depends on the borrower's credit profile.

The bank has also reduced interest rates on loans against property from 9.85 per cent to 9.15 per cent, the statement said. The bank said it offers car loans at a fixed interest rate under a 6-month marginal cost of financing based lending rate, with a starting rate of 8.65 per cent per annum.