Mumbai, June 15: The State Bank of India (SBI) ' the country's largest commercial bank ' today brought down lending rates by 50-350 basis points on borrowings by companies and the farm sector.
The rate rejig was carried out by realigning the spread over its base rate, which was left unchanged at 10 per cent. However, the interest rate relief was not extended to retail borrowers.
The base rate is the minimum lending rate that banks can charge their customers.
The SBI said it was offering the interest rate relief to its borrowers because of the current scenario of economic slowdown along with declining industrial growth.
The country's largest bank added that the rate revision would not cover personal loans, loans sanctioned under specific schemes and export credit for which a separate interest rate structure was in place. Thus, there will be no changes in interest rates on home and other retail loans.
While the PSU bank brought down the tenor premium on term loans in the region of 40-100 basis points, a statement from the SBI said a concession of 25-100 basis points had been extended to borrowers with external credit rating (ECR) of investment grade and above along with the bank's threshold internal credit rating.
The SBI also introduced a separate interest rate structure for borrowers with Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) cover with limits up to Rs 1 crore to increase the credit flow to the small and medium enterprises sector.
The CGTMSE was set up by the government in association with Sidbi to operationalise the credit guarantee scheme. The scheme seeks to reassure the lender that if a micro and small enterprise, which received collateral free credit facilities, fails to discharge its liabilities to the lender, the guarantee trust will make good the loss incurred by the lender up to 75-85 per cent of the credit facility.
The SBI also cut interest rates for borrowers under the agriculture segment by 75-350 basis points. The bank pointed out that direct and indirect agriculture segment borrowers with limits above Rs 25 lakh and up to Rs 100 crore will be offered finer rates of interest to encourage credit flow to the priority sector.
The revision by the SBI comes just two days before the RBI is set to announce its mid-quarter review of monetary policy. The central bank is widely expected to bring down the repo rate by 25 basis points.
This is the second time in around two months that the SBI is tinkering with its lending rates without touching the base rate.
In April, the SBI brought down the interest rate on car loans by 75 basis points.