"SBI has cut interest rates for exporters by 50 basis points effective last Saturday (June 23, 2012). The decision was taken at asset liability committee (Alco) meeting last Saturday," SBI Chairman Pratip Chaudhuri said.Export credit is linked to the bank's base rate and varies from 2.5% to 6% above that depending on various factors including credit rating of the exporter. SBI base rate is 10%.
While leaving the key interest rates and cash reserve requirements of banks unchanged at its mid-quarter review last week, 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% from 15 %.The move, which RBI claimed was a 0.50% indirect Cash Reserve Ratio (CRR) cut, will release Rs. 30,000 crore into the system, thereby increasing the overall liquidity conditions.
Banks on an average have been borrowing nearly Rs. 1 lakh crore from RBI daily due to tight money supply conditions.
The interest rate charged on the ECR facility is equivalent to the repo rate, which is currently 8 %.
SBI has recently announced up to 3.5 % cut in lending rates to top-rated corporates, SMEs and farm loan borrowers but not for individuals, effective June 1.