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Indian State Bank cuts rates for exporters
Publication Date : 29-06-2012
India's top lender -- State Bank of India -- has cut its interest rates for exporters by 50 basis points or 0.5 per cent effective with effect from June 23.
Export credit rate is linked to the bank's base rate and is usually 2.5 to 6 per cent above that. SBI's base rate is 10 per cent.
According to the SBI chairman Pratip Choudhuri, the bank took the decision at its asset liability committee meeting held recently.
SBI has acted after the Reserve Bank of India in its credit and monetary policy statement on June 18 increased the refinancing limits to exporters -- called export credit refinance -- from 15 per cent to 50 per cent.
The move was announced as a substitute to actual cut in banks' CRR (cash reserve ratio). The central bank's policy measure would release 30,000 crore rupee (US$5.28 billion) into the banking sector.
The RBI's increase in credit limit to exporters will facilitate banks to raise more money at eight per cent -- short term borrowing or repo rate -- to the extent of 50 per cent of their loan exposures to exporters.
The SBI chairman had been expecting the RBI to cut CRR but the demand seems to have been granted by way of a hike in export refinance limit.
The SBI had recently announced up to 3.5 per cent cut in lending rates to top rated corporates, SMEs (small and medium enterprises) and farm loans.