The reduction in marginal cost of funds based lending rate (MCLR) came after a gap of almost 10 months. The bank had last cut the rate on January 1.
The move by the SBI will trigger rate cut by other lenders.
With the reduction, the MCLR for one year has come down to 7.95 percent from 8 percent, SBI website said.
The new rate would be effective November 1, it said.
The MCLR on overnight borrowings has been reduced to 7.70 percent from 7.75 percent, while the lending rate for three-year tenure has been cut from 8.15 percent to 8.10 percent.
Similarly, the bank reduced the lending rate by similar percentage point for tenures including one month, three months, six months and two years.
Meanwhile another public sector lender Allahabad Bank also reduced the MCLR rate by 0.15 percent across all tenor.
With the reduction, one-year MCLR has come down to 8.30 percent as against 8.45 percent effective on Wednesday.