The country's largest lender, State Bank of India, has announced that it will soon slash the interest rates on loans given to exporters. The move comes just days after Reserve Bank increased the ceiling on export refinancing limits of the banks.
On the matter, Chairman of SBI, Mr. Pratip Chaudhuri said, "We will surely cut lending rates to exporters following the RBI enhancing export credit refinance limit to 50 percent in the policy review. However, the quantum of the reduction will be decided by our Alco (asset liability committee) meeting, which will be held next Saturday."
Further, he mentioned that the decision of the RBI to increase the export refinancing limits will have an impact on liquidity, in the future, but he did not mention the quantum of the impact.
Recently, reserve bank released its mid-quarter review in which it hiked the refinancing limits of banks to exporters, also called export credit refinance (ECR), from 15 percent to 50 percent. RBI claimed that this step will improve the total liquidity conditions by introducing Rs.30, 000 crore in the economy.
While releasing the mid quarter policy review, the reserve bank said, in a statement that, "With a view to enhancing the credit flow to the export sector, it has been decided to enhance the eligible limit of the ECR facility for banks (excluding RRBs) from 15 percent of outstanding export credit eligible for refinance to 50 per cent, effective fortnight beginning June 30. This will provide additional liquidity support to banks of over Rs 30,000 crore."