Oriental Bank of Commerce (OBC) has slashed its lending rate for MSME advances as part of its efforts to kickstart revival in this sector.
This public sector lender is confident of making good the revenue loss from such a move with expected increase in business volumes, S.L. Bansal, Chairman & Managing Director, OBC, told Business Line.
OBC may take a revenue hit of about Rs 30 crore in the remaining four months, but this could be covered with higher business volumes, Bansal added.
The basic purpose for the rate cut decision is to give a push to the MSME sector in the current times of economic slowdown, Bansal said.
Also, there is not much demand for credit from large corporates. MSME advances account for nearly 15 per cent of the total advances of the bank.
Micro, small enterprises
Lending rates for micro and small enterprises have been reduced from 25 basis points to 75 basis points for advances above Rs 25 lakh and up to Rs 1 crore.
For advances above Rs 1 crore, the reduction in interest rate ranges from 50 basis points to 200 basis points.
Medium enterprises
OBC has slashed the interest rate by 25 basis points to 150 basis points for advances up to Rs 1 crore.
For advances above Rs 1 crore, the lending rate reduction ranges from 50 basis points to 150 basis points.
Effective date
All the revision in lending rates will be effective December 1 and be applicable to all the existing as well as fresh advances sanctioned to MSMEs under manufacturing as well as services sector.