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Sunday, April 12, 2009

SBI slashes rates on new SME loans

MUMBAI: State Bank of India on Saturday cut interest rates for new small and medium enterprise (SME) loans and announced a few other measures to improve credit flow to the segment.

The bank has slashed the lending rates for new SME loans up to Rs. 5 lakh to eight per cent and those for loans Rs. 5-25 lakhs to 10 per cent, a SBI release here said.

The rate reduction will be available for the next two years and will be applicable for working capital and term loans provided they are covered under CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises), the bank said.

After two years, the bank will review the rates according to the prevailing market conditions, the bank said. SBI has also extended the SME Help and SME Care schemes, under which it offers loans at eight per cent to SMEs from April to September 30. Moreover, loans under SME Help will now be available for two years at eight per cent, it said. The bank at present has 12-lakh SME customers.

SBI has so far disbursed Rs. 300 crore through SME Help and SME Care out of which, nearly Rs. 250 crore was disbursed under SME Care, SBI Chief General Manager B. S. Bhasin said.

SMEs now contribute 20 per cent to the bank’s total revenue and the performance was likely to improve in the period ahead with an expected revival post-September, Mr. Bhasin said.

“The sector expects a recovery from the downturn post-September, which would have a positive impact on the bank’s SME business as well,” Mr. Bhasin said. SBI has begun the restructuring process of 41,000 SME accounts, Mr. Bhasin said. — PTI

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