The country's largest public sector lender State Bank of India has cut lending rates by 50 to 350 basis points for SMEs (small and medium enterprises) and agriculture segments.
Without revising the benchmark base rate, which is currently at 10 per cent, the bank has pared the lending rates by tweaking the spread it charges over the base rate.
The bank also reduced the tenor premium on term loans by 40 to 100 basis points (bps). A basis point is one hundredth of a percentage point.
According to the bank, borrowers with External Credit Rating of Investment Grade and the bank's Internal Credit Rating will get a 25-100 bps concession.
The cut in lending rates comes about a week after the bank had cut interest rates on short-term retail deposits by 25 basis points and just a couple of days before the RBI's mid-quarter review of monetary policy.
Interest rates on retail loans such as personal, housing, auto, car and education remain unchanged. The bank had reduced interest rates on these loans in the last 2-3 months, announced Mr Santosh Nayar, Deputy Managing Director, SBI.
Mr A. Krishna Kumar, Managing Director, SBI, said the rate cut may impact the bank's net interest margins by 10-15 bps.
Interest rates for borrowers under the agriculture segment have been brought down by 75 to 350 bps, while those with loan limits above Rs 25 lakh and up to Rs 100 crore in the direct and indirect agriculture segment will be offered finer rates, the bank said.
In the first two months of the current quarter, deposits and advances of the bank grew by Rs 26,000 crore and Rs 8,000 crore respectively.