State Bank of India, which on Friday cut its deposit rates by 25-50 basis points, today reduced its lending rates applicable on new loans to small and medium enterprises (SMEs) to eight-ten per cent.

SBI, the country's largest lender, also announced a few other measures to improve credit flow to the small and medium industries.

For loans up to Rs5 lakh, SBI has slashed lending rates for new SMEs to eight per cent and for loans Rs5-25 lakh the bank will charge 10 per cent, an SBI release said.

The reduced rates will be available for the next two years and will be applicable for working capital and term loans provided they are covered under CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises), the bank said.

At the end of two years, ie, by April 2011-12, the bank will review the rates according to the prevailing market conditions, SBI said.

SBI has also extended the SME Help and SME Care schemes, under which it offers loans at eight per cent to SMEs from April to 30 September 2009.

Loans under SME Help will also now be available for a period of two years at eight per cent, it said. The bank currently has 12 lakh SME customers.

Meanwhile, another state-controlled lender, IDBI Bank, on Friday announced a reduction in its benchmark prime lending rate (BPLR) by 0.5 per cent to 13 per cent effective April 15.

The Bank also reduced its deposit rates by 0.25-0.5 per cent across various maturities, it said in a press release.

One to three year maturity deposits up to Rs15 lakh will now attract a rate of 8.25 per cent as against 8.5 per cent while 1,100-days deposits will carry a rate of 8.75 per cent as against 9.25 per cent, the bank said.

State Bank of India, which also cut its deposit rates by 0.25-0.5 per cent across different tenures from 13 April, will pay deposits with one year to less than two years maturity interest at the rate of 7.75 per cent as against 8.10 per cent earlier.

Deposits with two years to less than 1,000 days and 1,000 days maturity will earn 8 per cent and 8.25 per cent as against 8.25 per cent and 8.5 per cent respectively.