Mumbai, Nov. 11: State Bank of India (SBI) today slashed interest rates on loans to small-scale industries and farmers by 0.25 per cent to one per cent. SBI’s move comes a week after the Reserve Bank of India cut interest rates on loans to finance rural infrastructure projects.
SBI said: “The reduction in interest rate is with effect from November 1, and is expected to give a positive thrust to these vital sectors.”
The rate for short-term loans between Rs 25,000 and Rs 50,000 up to one year for the SSI sector and small businesses have been cut by one per cent to 8.75 per cent. For loans between Rs 2 lakh and Rs 5 lakh, SBI has reduced the lending rate by 0.75 per cent to 10.50 per cent.
The bank said that the decision was in “the interest of borrowers”.
However, the interest rate for loans between Rs 50,000 and Rs 2 lakh remains unchanged at 9.75 per cent. The bank added that the benefit has been extended for loans above one year as well.
For the agriculture sector, interest rates have been reduced by 0.25 per cent to 10 per cent for term loans between Rs 50,000 and Rs 2 lakh and 0.5 per cent to 10.50 per cent for term loans between Rs 2 lakh and Rs 5 lakh.
The banking norms laid down by the Reserve Bank stipulate 40 per cent of bank loans for the priority sector, which include small-scale industries and agriculture. The RBI has been unhappy that the benefits of softer interest rates have not been passed on to these sectors.
Last week SBI had lowered interest rates on deposits by 25-50 basis points.
PTI adds: India’s largest commercial bank with 10,000 branches spread across the country is planning to set up an information technology (IT) company for which it is scouting for a joint venture partner, chairman Arun Kumar Purwar said.
“The joint venture is under discussion,” Purwar said. But, he declined to give names of the joint venture partners shortlisted. SBI had started a technology upgradation drive from 2001 and earmarked Rs 500 crore investment in this area.
In view of its nationwide operations, the bank has decided to have a dedicated IT company, which would develop cutting-edge technology for it and its seven associates.
SBI sources said the bank is integrating treasury operations and technology platform for its ATM and branch inter-connectivity of the parent with the associates.
Although merger of SBI and its associates is ruled out in the near future, the SBI group intends to synergise its operations and swap branches to reduce costs and be competitive.