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Moneylife » Economy & Nation » Money & Banking » SBI cuts interest rate on loans to exporters by 0.5%

SBI cuts interest rate on loans to exporters by 0.5%

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PTI | 28/06/2012 02:47 PM | 

SBI chairman Pratip Chaudhuri said that the bank cut interest rates for exporters by 50 bps, effective 23rd June. The move comes within days of the RBI increasing the export refinancing limits of banks


Mumbai: State Bank of India, the country's largest lender, has cut interest rate on loans to exporters by 0.5% within days of the Reserve Bank of India (RBI) increasing the export refinancing limits of banks, reports PTI.
 
"SBI has cut interest rates for exporters by 50 basis points (bps) effective 23 June 2012. The decision was taken at asset liability committee (Alco) meeting last Saturday," SBI chairman Pratip Chaudhuri said.
 
Export credit is linked to the bank's base rate and varies from 2.5% to 6% above that depending on various factors including credit rating of the exporter. SBI's base rate is 10%.
 
While leaving the key interest rates and cash reserve requirements of banks unchanged at its mid-quarter review last week, RBI had enhanced liquidity to exporters by increasing the refinancing limits of the outstanding rupee export credit for banks-called export credit refinance (ECR)-to 50% from 15%.
 
The move, which RBI claimed was a 0.50% indirect Cash Reserve Ratio (CRR) cut, will release Rs30,000 crore into the system, thereby increasing the overall liquidity conditions.
 
Banks on an average have been borrowing nearly Rs1 lakh crore from RBI daily due to tight money supply conditions.
 
The interest rate charged on the ECR facility is equivalent to the repo rate, which is currently 8%.
 
SBI had recently announced up to 3.5% cut in lending rates to top-rated corporates, SMEs and farm loan borrowers but not for individuals, effective 1st June.
 

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