When I was looking at SBI site, I got this info:

Loan Amount

Rate of Interest*

For loans upto Rs.4 lacs - 3.50% above Base Rate, currently 13.50% p.a.

What does it mean? interest rate is 13.5 or 3.5? I could not understand terminology.

also it says:

1% concession for full tenure of the loan, if interest is serviced promptly as and when applied during the moratorium period, including course duration

what is that?


The interest rate is 13.5%

The Reserve Bank of India has made it mandatory to quote all variable loans as "Base Rate + Spread". The Reserve Bank has given a guideline / formula to calculate the Base Rate. All loans should be above Base Rate. Currently the Base Rate for SBI is at 10%. So you are getting a variable rate of Interest. If the base rate changes from 10 to 11%, your interest will become 14.5%. If the base rate goes down from 10 to 9%, you rate will become 12.5%.

If you make monthly re-payments on time throughout the loan duration, then you will get a discount of 1% in the rate of interest.

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