SBI cuts rates for exporters by 0.5%

State Bank of India has slashed interest rate on loans to exporters by 0.5 per cent within days of the Reserve Bank increasing the export refinancing limits of banks.

Export credit is linked to the bank’s base rate and varies from 2.5 per cent to 6 per cent above that depending on various factors including credit rating of the exporter. SBI base rate is 10 per cent. “SBI has cut interest rates for exporters by 50 basis points effective June 23. The decision was taken at asset liability committee meeting last Saturday,” SBI Chairman Pratip Chaudhuri said. While leaving the key interest rates and cash reserve requirements of banks unchanged at its mid-quarter review last week,the 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 per cent from 15 per cent.

The interest rate charged on the ECR facility is equivalent to the repo rate,which is currently 8 per cent.