In an effort to improve cash flow to the SME segment, State Bank of India has decided to slash interest rates on loans, which they hope will also resolve liquidity issues
The State Bank of India (SBI) has recently decided to cut interest rates on loans provided to SME customers. The bank expects the rate cut to resolve liquidity issues and enhance credit flow to the cash-strapped SME sector.
B Dutta, Executive Officer, SBI, Kolkata, said, “The bank has been consistently taking steps to improve cash flow to the SME segment. The recent rate reductions are a part of its commitment to help small units tide over the liquidity crisis.”
The country’s largest lender has also decided to freeze interest rates on certain term loans and working capital at 8% for SMEs. The bank will offer new term loans of up to Rs 5 lakh in the range of 8.5% to 10%. In addition, the bank will levy interest rates between 9% and 11% for loans between Rs 5 lakh and 25 lakh,
“The main idea is to offer adequate and timely funds to the SME sector to help them overcome the unprecedented liquidity crisis. With the help of such rate reductions, it will become easier for small businesses to have access to sufficient funds,” commented Vinay Prasad, Senior Officer, SBI, Ranchi.
So far, SBI has introduced several initiatives for its 1.2 million SME clients. Recently, it announced two products for the small customers - SME Care and SME Help. Besides, the largest Indian bank is also aggressively restructuring the loans of its SME customers. The bank has started restructuring about 41,000 SME loan accounts and this figure is likely to go up in the coming days.
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