SBI NEW policies :: SBI cuts interest rate for exporters by 0.5%,news for investor es,business

Mumbai: Country's largest lender SBI has cut interest rate on loans to exporters by 0.5 percent within days of the Reserve Bank increasing the export refinancing limits of banks.

"SBI has cut interest rates for exporters by 50 basis points effective last Saturday (June 23, 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 percent to 6 percent above that depending on various factors including credit rating of the exporter. SBI base rate is 10 percent.

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 percent from 15 percent.

The move, which RBI claimed was a 0.50 percent indirect Cash Reserve Ratio (CRR) cut, will release Rs 30,000 crore into the system, thereby increasing the overall liquidity conditions.

Banks on an average have been borrowing nearly Rs 1 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 percent.

SBI has recently announced up to 3.5 percent cut in lending rates to top-rated corporates, SMEs and farm loan borrowers but not for individuals, effective June 1.

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