[sbinews] SBI cuts rates for priority sector lending -Businessline

  • From: rspai@xxxxxxxx
  • To: sbinews@xxxxxxxxxxxxx
  • Date: Wed, 12 Nov 2003 21:29:39 +0500

SBI cuts rates for priority sector lending 
Our Bureau (Businessline) 
Mumbai , Nov 11 

STATE Bank of India has made credit to borrowers in the small-scale and 
agriculture sectors cheaper by around 25-100 basis points in some segments, 
effective November 1. 

Mr A.K. Purwar, Chairman, SBI, told Business Line, post-Credit Policy SBI 
undertook a comprehensive review of its interest rates. The first instalment of 
deposit rate cuts were announced recently, and the reduction in the rates for 
the priority sector advances is the follow up. 

On the issue of a reduction in prime lending rate, Mr Purwar said that while 
the bank would review its rates from time to time, there was no immediate plan 
for a cut. 

In its latest move, the bank has slashed interest rates on short-term loans to 
SSIs for a period of up to one year, by 100 basis points to 8.75 per cent, for 
advances between Rs 25,000 and Rs 50,000. 

For loans between Rs 2 lakh and Rs 5 lakh, the new rate is 10.50 per cent, 
lower by 75 basis points from the previous rate of 11.25 per cent. 

The interest rate for the slab between Rs 50,000 and Rs 2 lakh remains 
unchanged at 9.75 per cent. 

For short-term loans repayable over one year, for advances of above Rs 25,000 
to Rs 50,000, the rate has been revised downwards by 100 basis points to 9.25 
per cent. 

Similarly, for loans above Rs 2 lakh and up to Rs 5 lakh, the rate has been 
reduced by 100 basis points to 11 per cent. 

Interest rates on agriculture advances have been reduced by 25 basis points to 
10 per cent for term loans between Rs 50,000 and Rs 2 lakh. 

For term loans between Rs 2 lakh and up to Rs 5 lakh, the rate is 50 basis 
points lower, at 10.50 per cent. 

SBI's agriculture advances for the first half of this financial year amounted 
to around Rs 15,000 crore while advances to the SSI sector amounted to roughly 
Rs 12,000 crore. 

Bank officials said, both segments grew by around 10 per cent as against the 
corresponding period the previous year. During the fiscal year 2002-03, the 
bank's priority sector advances rose to Rs 43,000 crore against Rs 41,000 crore 
in the previous year.

However, during this period priority sector loans, as a percentage of net bank 
credit, slipped marginally to 40 per cent, from 41.53 per cent in the previous 
year. 

Bank officials largely ascribe this decline to a large expansion in corporate 
advances during the year, constituting net bank credit.



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