'SBI has reduced interest rates on SME loans'

BANGALORE, INDIA: State Bank of India (SBI) chairman and managing director Pratip Chaudhary has said that the bank has reduced interest rates on loans small and medium enterprises (SMEs).

Speaking to reporters on the sidelines of a function here on Monday, Chaudhary said, “We have reduced interest rates on loans for education and purchase of cars and to SMEs.”

As the SBI's base lending rate was at 10 per cent, lowest among state-run banks, it did not lower it further after the RBI's rate cut.

The SBI chief further said that the rupee's slide against the dollar had no impact on Indian banking operations though profitability of importers would be affected.

"There is no impact of a falling rupee on banks but it (slide) would strain the profitability of our importing customers, while exporting customers will have an advantage," Chaudhary told reporters on the margins of a bank function here.

Noting that further cut in interest rate would depend on government borrowings this fiscal (2012-13), the chairman said banks were borrowing at 8.5 per cent (from the RBI) and lending (primary rate) to the corporate sector at nine per cent and above as the government borrowings was at eight per cent currently.

"Lowering of interest rate is largely determined by the rate at which the government borrows from the central bank. If the RBI cuts rates further, banks will be in a position to lower lending rate," Chaudhury said, after donating a Rs 8.40-lakh school bus to Angavikalara Ashakirana Trustat Davangere, about 260 km from here, as a gift from the bank's regional office.

The Reserve Bank of India (RBI) on April 17 reduced key rates such as repo (repurchase) rate 50 basis points (0.5 per cent) to 8 per cent from 8.5 per cent, resulting in the reverse repurchase rate decreasing.