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eCircular

Circular No.158-2010-BC-RMD-10 Date: 30-06-2010

PERMANENT UTILITY

INTRODUCTION OF BASE RATE (BR) EFFECTIVE FROM 1ST JULY 2010


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Attention of branches/offices is invited to introduction of Base Rate, effective from 1st July, 2010.

The existing BPLR system, introduced in 2003, fell short of its original objective of bringing
transparency to lending rates. This was mainly because under the BPLR system, banks could lend
below BPLR. Hence, the Base Rate concept is introduced as per the directions of RBI, in order to
have transparency in the pricing of lending products.

Reserve Bank of India, vide circular No.DBOD.No.Dir.BC.88/13.03.00/2009-10 dated 09.04.2010, has


issued detailed guidelines on Base Rate.

Base Rate has been computed based on components, such as, Cost of Deposits, Negative Carry on
CRR and SLR, Unallocatable Overhead Costs and Average Return on Networth. Based on the above
components, Bank has computed and arrived at a Base Rate of 8.25%, effective from 1st July, 2010.

Base Rate will replace the existing Benchmark Prime Lending Rate (BPLR) and will be applicable to
all new loans, including Exports, and for those old loans that come for renewal.

Existing loans linked to BPLR will run till their maturity. However, if any of the existing borrowers
want to switch over to the new system, before expiry of the existing contracts, an option will be given
to them for switch over. However, no charges will be levied for such switch over.

Since Base Rate will be the minimum rate for all loans, branches/offices are not permitted to
lend below the Base Rate. However, by extending interest subvention to Agriculture and Export
Credit and rebate provided for prompt repayment for agriculture loans, if the effective rate falls below
the Base Rate, the same shall not be construed as violative of base rate guidelines.

Exemptions: Base Rate is not applicable to the following type of loans.

Loans to Banks depositors against their own Deposits.


Loans to Banks own employees.
DRI Loans.

Staff Loans under General Scheme: If any staff member, who has already availed loans, such as,
Housing Loan, Education Loan, SOD / ODC under General Public Scheme of the Bank, are entitled to
switch over to Base Rate, by giving an option letter. For all new loans availed by staff members under
General Public Scheme, on or after 1st July, 2010, interest rate will be linked to Base Rate.

Floating Rate: Floating rates are linked to Base Rate and spread. Floating rates will automatically get
revised as and when there is revision in Base Rate or spread or both.
2 Circular No.148-2010-BC-P&D-43 / 18-06-2010

Fixed Rate: Reset Clause may be stipulated in the case of fixed rate to the effect that the Bank
reserves the right to revise the interest rate upwards on the expiry of reset period or such other
intervals, determined from time to time, as mentioned in the sanction letter.
Circular No.158-2010-BC-RMD-10 / 30-06-2010 3

Product Pricing: Product pricing is arrived at based on borrower specific operating costs, risk
premium and tenor premium. The premium so arrived at is added to Base Rate to arrive at the interest
rate for various loan products.

Tenor Premium: Tenor premium of 0.25% on all Term Loans of 36 months and above, other than
Retail Products, SHG, Premises Loan, Reverse Mortgage, to be added to the interest rates specified for
the respective sectors. However, tenor premium need not be added to DRI Loans, Loans to Banks
employees, Loans against deposits, as these type of loans are not linked to Base Rate.

Loans sanctioned up to 30th June and not disbursed: Wherever loans are sanctioned upto 30th June,
but not disbursed till 30th June, shall be modified by the respective sanctioning authorities, by
incorporating rate of interest linked to Base Rate. Branches shall not execute the documents / disburse
loans sanctioned under interest linked to BPLR, w.e.f. 01.07.2010 and the sanction has to be retrans-
mitted to the respective sanctioning authorities for modification of interest rate linked to Base Rate.

Subvention of interest on Agriculture and Exports: 2% Interest subvention and 1% Additional


Incentive Subvention on Short Term Crop Production Loans will continue till 31.03.2011, as per
circular No.271-2009-BC.

Interest rate on Rupee Export Credit to certain category of exporters @ 2% as mentioned in circular
No.115-2010-BC will continue till 31.03.2011.

Restructured loans: In case of restructured loans if some of the WCTL, FITL, need to be granted
below the base rate for the purpose of viability and there are recompense clauses etc., such lending will
not be construed to be violative of base rate guidelines. However, existing guidelines on extent of
concessions on restructured accounts will continue.

Maximum Spread: The maximum spread stipulated by the Bank over Base Rate, is 5.25% in respect
of advances to Agriculture, Micro and Small Enterprises and 6.75% on all other advances.

Debit balance in SB / Current Account: In the case of debit balances allowed in Savings Bank /
Current Account, interest rate at Base Rate plus 6.75% shall be charged from the date of allowing debit
balance up to the stipulated period of 30 days for SB and 15 days for Current accounts and overdue
interest shall be added thereafter.

Purchase of Plots SyndNivas: Where house is not constructed within the period of 2 years from the
date of availment of loan, interest to be levied consequent to switch over to Base Rate system will be
communicated separately by MSME & Retail Banking Department at Corporate Office, Bangalore.

Concessions in interest rates: Field functionaries are empowered to permit concessions in interest
rate as mentioned in Annexure-6. However, Executive Director/Chairman & Managing Director is
only empowered to sanction any other finer rate.

Special Monitoring Accounts: Guidelines for considering interest concession in respect of Special
Monitoring Accounts identified during the course of a financial year linked to Base Rate, will be
issued separately by Corporate Office: Recoveries Department.

Non Performing Assets: Guidelines for considering interest concession in Non Performing accounts
and future interest for One Time Settlement will be issued separately by Corporate Office: Recoveries
Department.

Documentation: Consequent to switching over to Base Rate, branches are advised to obtain
documentation as per Annexure9 for new borrowers and Annexure10 for existing borrowers who
want to switch over to Base Rate.
4 Circular No.158-2010-BC-RMD-10 / 30-06-2010

Branches are advised to utilise the above formats for all types of loans, including general housing loan,
till the existing printed formats are exhausted. However, existing formats may be used for DRI
advances, LDs / ODDs and all types of staff loans other than loans availed under General Scheme for
public. It is reiterated that branches shall disburse loans only after executing additional documents as
per Annexure9 and Annexure-10, as the case may be.

IT related matters: Effective from 1st July, 2010, branches shall open borrowal accounts only as per
new codes to be provided by CO: Department of Information Technology. Separate guidelines will be
issued by DIT, in this regard.

Interest rates: The rate of interest to be charged on monthly compounding basis, applicable to all
sector of advances, general instructions/guidelines on application of interest rates, formats for
documentation, etc., are furnished in the following Annexures.

Annexure Description
1. Standard Table showing floating interest rates on (monthly compounding) on
advances other than Export Credit linked to Base Rate.
2. Standard Table showing floating interest rates on Export Credit
3. Standard Table showing floating interest rates (monthly compounding) on Imports and
Purchase of Foreign Currency instruments linked to Base Rate.
4. Interest rates on advances carrying fixed rate of interest (monthly compounding)
5. Standard Table showing interest rates on loans / overdrafts against FCNR and Third
Party Deposits.
6. Table showing concessional interest rate on various loan products
7. Standard Table for determining Overdue / Penal rate of interest
8. General Instructions / guidelines on application of interest rates.
9. Annexure to be taken in respect of new loans/borrowers till existing formats are
exhausted.
10. Annexure to be taken in respect of existing borrowers who opt for Base Rate.

Display in the Notice Board: Branches shall display in the Notice Board the interest rates on
advances, applicable w.e.f. 01.07.2010. Branches shall also display in the notice board the option
available for existing borrowers to switch over to Base Rate system.

Clarifications required, if any, about this circular, may be sought from RISK MANAGEMENT
DEPARTMENT - Credit Policy and Procedures Division at Corporate Office, Bangalore, through
respective ROs as per extant guidelines.

KUIUK : YRTZI : YRUGN (T. MURALIDHARAN)


Check Word GENERAL MANAGER
Circular No.158-2010-BC-RMD-10 / 30-06-2010 5

Annexure-1

STANDARD TABLE SHOWING FLOATING INTEREST RATES


ON (MONTHLY COMPOUNDING) ADVANCES
other than Export Credit linked to Base Rate

1. AGRICULTURE

All Agriculture Loans

Size of Credit Limit Interest rate*


Upto Rs.50,000/- BR + 0.25% 8.50%
Above Rs.50,000/- and upto Rs.2.00 lakhs
BR + 1.75% 10.00%

* Tenor Premium of 0.25% on all Term Loans of 36 months and above to be added to the
above rates.

For Short term loans upto Rs.3.00 lakhs where subvention is available interest @ 9% is to be
levied.
1% concession in applicable rate permitted for Advances to Farmers Service Cooperative
Societies, subject to Minimum Base Rate.

Above Rs.2.00 lakhs:

Interest Rate*
Rating
STL/WC/TL
SYND 1 BR + 2.75% 11.00%
SYND 2 BR + 3.00% 11.25%
SYND 3 BR + 3.50% 11.75%
SYND 4 BR + 4.25% 12.50%
SYND 5 BR + 5.00% 13.25%
SYND 6 BR + 5.25% 13.50%
SYND 7 & BELOW BR + 5.25% 13.50%
NPA BR + 5.25% 13.50%
* Tenor premium of 0.25% on all Term Loans of 36 months and above to be added to the
above rates.

2. SYNDSWARNA (Irrespective of amount)

Particulars Normal Jewels


For Agriculturists BR + 0.75 9.00%
Priority Sector other than Agriculturists, Non
BR + 2.75% 11.00%
Priority Sector and SyndSwarna Express

For Hallmarked Jewels, 0.25% concession in applicable rate permitted subject to minimum of
Base Rate.

3. Micro and Small Enterprises (M S E) (including KVI Sector)

Size of credit limit Interest rate*


Micro and Small Enterprises (MSE)-(Manufacturing and Service Sector)
Upto Rs.2,00,000/ BR + 1.75% 10.00%
* Tenor premium of 0.25% on all Term Loans to be added to the above rates.
6 Circular No.158-2010-BC-RMD-10 / 30-06-2010

Above Rs.2.00 lakhs:


Rating Small Enterprises (Interest Rate*)
SYND 1 BR + 2.50% 10.75%
SYND 2 BR + 2.75% 11.00%
SYND 3 BR + 3.25% 11.50%
SYND 4 BR + 4.00% 12.25%
SYND 5 BR + 4.75% 13.00%
SYND 6 BR + 5.25% 13.50%
SYND 7 & Below BR + 5.25% 13.50%
NPA (Both for Small and Micro) BR + 5.25% 13.50%
*In respect of Micro Enterprises rated SYND 6 and above, 0.25% less than the rates
mentioned for Small Enterprises. In case of SYND 7 and below rated accounts and NPAs
same rates as applicable to Small Enterprises to be charged.

However, Tenor premium of 0.25% on all Term Loans of 36 months and above to be added
to the above rates for both Micro and Small Enterprises.

Note:
MSE stands for Micro and Small Enterprises in Manufacturing and Service Sector.
Interest rate for Transport Operators and Retail Trade as applicable to Micro and Small
Enterprises.

4. Housing Loan Scheme under Floating Interest Option (SyndNivas, Farm House Loans and
Golden Jubilee Rural Housing Finance)
Amount and Tenor Interest Rate*
Upto 20 lakhs
(a) Upto 10 years BR + 0.25% 8.50%
(b) Above 10 to 20 years BR + 0.50% 8.75%
Above Rs.20 lakhs
(a) Upto 10 years BR + 1.25% 9.50%
(b) Above 10 to 20 years BR + 1.75% 10.00%
*Tenor Premium not applicable

0.50% concession in applicable rate available to Employees of Govt.Department/Public Sector


Undertakings/Corporations and Blue Chip Companies, where there is tie up arrangement or
corporates sponsor the applications and give irrevocable undertaking letter, subject to the
condition that the rate of interest so arrived shall not be below Base Rate.

Note: Wherever LTV ratio in housing loans at the time of sanction goes above 75%, rate of
interest to be increased by 25 bps over the applicable rate of interest.

5. RETAIL PRODUCTS (Tenor premium not applicable)


Name of the Product Interest rate
a) SyndSaral BR + 4.75% 13.00%

1% concession in applicable rate is available to Employees of Govt.Department/Public Sector


Undertakings/Corporations and Blue Chip Companies, where there is tie up arrangement or
corporates sponsor the applications give irrevocable undertaking letter.
0.25% concessions in applicable rate to Women beneficiaries

Note: These concessions are not cumulative and in case the borrower is eligible for multiple
concessions the maximum concession eligible under any applicable category shall be extended.
Circular No.158-2010-BC-RMD-10 / 30-06-2010 7

Name of the Product Interest rate


b) Loans against NSC, KVP, IVP, SV of
BR + 1.75% 10.00%
LIC Policy, RBI Relief Bonds

Name of the Product Interest rate Concession


c) SYNDVAHAN 2 Wheelers 1% concession in applicable rate
2 & 4 Wheelers irrespective BR + 3.75% 12.00% is available to Employees of Govt.
of amount 4 Wheelers Department/Public Sector Under-
BR + 3.25% 11.50% takings/Corporations & Blue Chip
Companies, where there is tie up
arrangement or corporates
sponsor the application and give
irrevocable undertaking letter.

d) For Pigmy Agents Interest rate as applicable to General Public for SyndSaral and
SyndVahan Loans.

e) SyndSenior / SyndPigmy / SyndSmallCredit / SyndNivasPlus / SyndRent/SyndVyapar


improved scheme

Product Interest rate


SyndSenior
SyndPigmy
SyndSmall Credit
BR + 3.75% 12.00%
SyndNivas Plus
SyndRent
SyndVyapar Improved Scheme

f) SyndLaghuUdyami Credit Card/SyndUdyog/SyndVyapar

As applicable to Micro and Small Enterprises depending on investment.

g) SyndVidya (Education Loans)

Interest rate
Upto Rs.4.00 lakhs BR + 2.25% 10.50%
Above Rs.4.00 lakhs BR + 2.75% 11.00%

1% concession in applicable rate is available to children of Employees of Government


Department / Public Sector Undertakings/Corporations and Blue Chip Companies, where
there is tie up arrangement or corporates who give irrevocable undertaking letter.
0.50% to SC/ST Boy students. 0.50% for Girl students of other than SC/ST category.
0.75% for girl students of SC/ST category. The overall concession extended to these
categories shall not exceed 1%.

Note: These concessions are not cumulative and in case the borrower is eligible for multiple
concessions the maximum concession eligible under any applicable category shall be
extended.

h) SyndMortgage Interest rate


Residential & Non residential BR + 6.25% 14.50%
8 Circular No.158-2010-BC-RMD-10 / 30-06-2010

6. Inland Bills backed by LCs of Scheduled Commercial Banks


IRRESPECTIVE OF AMOUNT Interest Rate
Upto 90 days BR + 0.25% 8.50%
91 to 180 days BR + 1.25% 9.50%
181 to 365 days BR + 2.25% 10.50%
LC Paid/BG Paid/DPG instalment paid
BR + 6.75% 15.00%
(including overdue interest of 2%)
For delayed period of remittance received in
respect of bills under IDBI/SIDBI Bill Re-
BR + 6.75% 15.00%
discounting Scheme (including overdue interest
of 2%)

7. Other Non Priority Sector Loans / Advances Interest Rate


BR + 6.75% 15.00%
* Tenor premium of 0.25% on all Term Loans of 36 months and above to be added to the above
rates.

8. Medium Enterprises, Large Industry, Finance granted to Housing and other intermediary
agencies for on-lending to ultimate beneficiaries and others not covered under any other
category.
Rating Interest Rate*
SYND 1 BR + 3.25% 11.50%
SYND 2 BR + 3.75% 12.00%
SYND 3 BR + 4.50% 12.75%
SYND 4 BR + 5.50% 13.75%
SYND 5 BR + 6.25% 14.50%
SYND 6 BR + 6.75% 15.00%
SYND 7 & Below BR + 6.75% 15.00%
NPA BR + 6.75% 15.00%
* Tenor premium of 0.25% on all Term Loans of 36 months and above to be added to the
above rates.

9. NBFC (NDSI) / CRE


Rating Interest Rate*
SYND 1 BR + 3.75% 12.00%
SYND 2 BR + 4.25% 12.50%
SYND 3 BR + 5.25% 13.50%
SYND 4 BR + 6.00% 14.25%
SYND 5 BR + 6.50% 14.75%
SYND 6 BR + 6.75% 15.00%
SYND 7 & Below BR + 6.75% 15.00%
NPA BR + 6.75% 15.00%
* Tenor premium of 0.25% on all Term Loans of 36 months and above to be added to the
above rates.

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Circular No.158-2010-BC-RMD-10 / 30-06-2010 9

Annexure-2

STANDARD TABLE SHOWING FLOATING INTEREST RATES ON EXPORT CREDIT

PARTICULARS Interest rate


PRE SHIPMENT CREDIT
a) Upto 270 days BR+ 1.25% 9.50%
b) Against incentives receivable from Govt. covered
BR+1.25% 9.50%
by ECGC Guarantee up to 90 days
POST SHIPMENT CREDIT
a) On demand bills for transit period (as specified by
BR+1.25% 9.50%
FEDAI)
b) Usance Bills (for total period comprising usance
period of export bills, transit period, as specified
by FEDAI, and grace period, wherever
applicable) BR+1.25% 9.50%
(a) Upto 180 days
(b) Upto 365 days for exporters under gold card
scheme
c) Against incentives receivable from Govt. (covered
BR+1.25% 9.50%
by ECGC Guarantee) upto 90days
d) Against undrawn balances (upto 90 days) BR+ 1.25% 9.50%
e) Against retention money (for supplies portion
only) payable within one year from the date of BR+1.25% 9.50%
shipment (upto 90 days)
WHERE NDD IS BEYOND 180 DAYS AND UPTO 12 MONTHS
a) From the date of advance upto 180 days BR+1.25% 9.50%
b) From 181st day from the date of advance upto
NDD or 12 months from the date of shipment,
whichever is earlier BR+5.75% 14.00%
BILLS NOT REALIZED WITHIN THE NTP/NDD
a) For the period NTP/NDD and upto 180 days from BR+1.25% 9.50%
the date of shipment
181st date to due date- 14.00%
b) For the period beyond 180 days from the date of
BR+5.75%
shipment (inclusive of overdue interest of 2%)
After due date till the 16.00%
date of realization
BR+7.75% (inclusive
of overdue interest)

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10 Circular No.158-2010-BC-RMD-10 / 30-06-2010

Annexure-3

STANDARD TABLE SHOWING FLOATING INTEREST RATES


(monthly compounding)
on Imports and Purchase of Foreign Currency instruments linked to Base Rate

1. Import Finance Interest Rate


A) In respect of foreign currency bills drawn under Import LCs
i) From the date of debit to the Nostro account till the date of retirement of the demand
bill or date of crystallization, whichever is earlier.
a) Working Capital As applicable for Cash credit
b) Others BR + 6.75% 15.00%
ii) From the date of crystallization in case of Demand Bills and from the due date in case
of Usance Bills
Working Capital As applicable for Cash credit
Others BR + 6.75% 15.00%
th
Note: Bills shall be crystallized into Rupee liability on the 10 day from the date of
receipt of documents in case of Demand Bills and on the due date in the case of
Usance Bills.
B) On Rupee Bill from the date of remittance made
i) Upto 10 days
a) Working Capital As applicable for cash credit
b) Others BR + 6.75% 15.00%
ii) Beyond 10 days
a) Working Capital As applicable for cash credit
b) Others BR + 6.75% 15.00%
2. Purchase of foreign currency instruments/clean instruments in foreign currency
purchased for transit period up to 15 days (Foreign Cheques and Drafts, etc)
a) For Personal purpose BR + 6.75% 15.00%
b) For Others As given in standard table furnished depending
on the size of advance, category of borrower,
purpose of advance and credit rating of the
borrower.
Notes: Foreign Currency amount should be crystallized into Rupee liability on 90th day from
the date of purchase, if instrument remains unpaid.
3. Devolved liability under Foreign BG
BR + 6.75% 15.00%
(inclusive of overdue interest of 2%)

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Circular No.158-2010-BC-RMD-10 / 30-06-2010 11

Annexure-4

INTEREST RATES ON ADVANCES CARRYING FIXED RATE OF INTEREST


(monthly compounding) (Tenor Premium not applicable )
1. SyndNivas Fixed
Upto 10 years
11.00%
Note: Reset period for review of rate of interest is 3 years.
2. Premises Loan 12.00%
3. Financing of Self Help Groups & NGOs
- Bank to SHGs
i) Within Group, per member loan NOT exceeding Rs.50,000/- 9.00%
ii) Within Group, per member loan exceeding Rs.50,000/- 10.00%
- Bank to NGOs 9.00%
- NGOs to SHGs
- Within group, per member loan NOT exceeding Rs.50,000/- 10.00%
- Within Group, per member loan exceeding Rs.50,000/- 11.00%
4. Reverse Mortgage 11.00%

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Annexure 5

STANDARD TABLE SHOWING INTEREST RATES ON LOANS / OVERDRAFTS


against FCNR and Third Party Deposits linked to Base Rate.
Part I Floating Rates Interest Rate
Advances against FCNR (B) Term Deposits BR + 1.75% 10.00%
Advances against FCNR (B) Term Deposits prematurely withdrawn
BR + 1.75% 10.00%
before completion of stipulated minimum period
Advances against FCNR (B) Term Deposits which are cleared out of
BR + 1.75% 10.00%
local rupee resources, held in respective NRO accounts
Advances against Third Party Deposits BR + 1.75% 10.00%*
In respect of advances against third party deposits, Deposit rate + 2% or Base Rate + 1.75%,
whichever is higher.

However, as far as loans against other Term Deposits and Pigmy Deposits, Base Rate is not applicable.
Part II- Fixed Rates
1. Advances against NRE Term Deposits, which are cleared out of 2% above
local rupee resources, held in respective NRO accounts. deposit rate.
2. Advances against Domestic/NRE Term Deposits prematurely 2% above deposit rate
withdrawn. for minimum period.
3. 2% above
Advance against Domestic/NRE/NRNR* Term Deposits.
deposit rate.
4. Advances against deposits of Staff members retired staff 1% above
members/widows of deceased staff members the deposit rate.
5. Advances against Pigmy Deposits 8.50%
Advances against term deposits are exempt from charging interest at monthly rests.
* NRNR deposit scheme is discontinued w.e.f.01.04.2002.

When a term deposit / NRE Term deposit is withdrawn before completion of a minimum term period,
interest at commercial rate shall be charged on the advances granted against such term deposits from the
date of advance. (i.e. Base Rate + 6.75%).

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12 Circular No.158-2010-BC-RMD-10 / 30-06-2010

Annexure-6

TABLE SHOWING CONCESSIONAL INTEREST RATE ON VARIOUS LOAN PRODUCTS

Sl.No. Name of the Concessions in applicable interest rate


Product
01. SyndSaral 0.25% to women borrowers (earlier SyndMahila)
1% concession in applicable rate is available to Employees of
Govt.Department/Public Sector Undertakings/Corporations and
Blue Chip Companies, where there is tie up arrangement or
corporates sponsor the applications and give irrevocable
undertaking letter.
Note: These concessions are not cumulative and only concession
as applicable to the category of borrowers is to be reckoned for
extending concession.

02. SyndVahan 1% concession in applicable rate is available to Employees of


Govt.Department/Public Sector Undertakings/Corporations and
Blue Chip Companies, where there is tie up arrangement or
corporates sponsor the applications and give irrevocable
undertaking letter.
03. SyndNivas 0.50% concession, in applicable rate is available to Employees
of Govt.Department/Public Sector Undertakings/Corporations
and Blue Chip Companies, where there is tie up arrangement or
corporates sponsor the applications and give irrevocable
undertaking letter, subject to the condition that the rate of interest
so arrived shall not be below Base Rate.
04. SyndVidya 1% concession in applicable rate is available to children of
Employees of Government Department / Public Sector
Undertakings/Corporations and Blue Chip Companies, where
there is tie up arrangement or corporates sponsor the applications
and give irrevocable undertaking letter.
0.50% to SC / ST Boy Students.
0.50% for Girl Students of other than SC / ST Category.
0.75% to Girl Students of SC / ST Category.
Note: These concessions are not cumulative and in case the
borrower is eligible for multiple concessions the maximum
concession eligible under any applicable category shall be
extended.
05. Pledge loans under 0.25% to Farmers under Priority Sector.
tie up with National 0.75% to Traders and Manufacturers under Priority Sector.
Bulk Handling In addition to the above concessions, Regional Heads are
Corporation empowered to consider an interest concession up to 0.25% p.a.
(NBHC) Ltd. for proposals of Rs.1.00 crore and above based on merits of each
proposal. This provision is applicable only to Pledge Loans
under tie up with NBHC Ltd. and should not be offered in a
routine manner.
06. Rated SME SE-1A, SE-1B, SE-2A, SE-2B-0.50%, SME 1 and 2 :0.50%
accounts concession in applicable rate.
SE-3A, SE-3B, SME 3:0.25% concession in applicable rate.

Note: The above concessions will be in vogue till its validity as stipulated by the concerned functional
departments at CO/HO.

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Circular No.158-2010-BC-RMD-10 / 30-06-2010 13

Annexure-7

STANDARD TABLE FOR DETERMINING OVERDUE / PENAL RATE OF INTEREST

Description Rate of Interest (% p.a.)


A. Overdue Interest:
Loans and Advances including Bills
i) Advances under DRI Scheme Nil
ii) Aggregate credit limits not exceeding Rs.5000/- in Nil
the case of general advances and Rs.25,000/- in the
case of priority sector advances
Note: The cut off point of Rs. 5000/- and Rs. 25,000/- referred to in (ii) above relates to original
advance/limit and not balance outstanding.
iii) Other category of advances including SSI advances 2% over the applicable normal rate
B. Penal Interest:
1) For non-submission/delayed submission of monthly 1% over the applicable normal
stock statement to be charged for delayed period rate.
2) For non-submission/delayed submission of CCR Form 1% over the applicable normal
I, II, under Quarterly Information System (QIS) to be rate.
charged on the entire balance outstanding in fund based
working capital limits for the entire quarter.
3) For diversion of funds. 1%over the applicable normal rate.
4) For non-submission of renewal proposal/additional
information/requirement on the renewal proposal
i) For the period upto three months from the date of
expiry of limits till date of receipt of renewal a) 0.75% over the applicable
proposal normal rate.
a) With provisional extension b) 1.00% over the applicable
b) Without provisional extension normal rate.
ii) For the delayed period beyond three months from
the date of expiry of credit limits till date of receipt a) 1.75% over the applicable
of the renewal proposal: normal rate.
a) With provisional extension. b) 2.00% over the applicable
b) Without provisional extension. normal rate.
iii) For delayed period beyond 30 days from the date of 2.00% over the applicable normal
calling for addl information/requirement on the rate.
renewal proposal
Note: The item No. 4 above is applicable for overdraft/cash credit/packing credit limits only.
Bills finance and non-fund based limits are exempt from the above rule.
C. Ceiling on Overdue/Penal Interest:
Total penal and overdue interest to be charged on account of loan/OD becoming
overdue/overdrawn, non/delayed submission of CCR forms/stock statement /renewal proposal,
diversion of funds, should not exceed 2% over the applicable normal rate at any point of time.
For credit limits not exceeding Rs.5,000/- in the case of general advances and not exceeding
Rs.25,000/- in case of priority sector advances, penal interest as per B above shall not be
charged.
D. Additional interest (penal interest) for non-creation of 1.25% over the applicable rate.
mortgage. (As per circulars No.129/96/BC, No.40-2003-BC
and No.55-2004-BC)

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14 Circular No.158-2010-BC-RMD-10 / 30-06-2010

Annexure-8

General instructions/guidelines on application of interest rates

1) Minimum Interest: Interest shall be collected for a minimum period of 7 days if the loan/OD is
closed within 7 days subject to a minimum of Rs.10.00.

However, this rule is not applicable in the case of following transactions:


a) LD/ODD. d) BG/DPG/LC paid accounts.
b) Drawing against clearing effects. e) Export Finance.
c) Debit balance in SB and Current Accounts.

2) Size of the limit:


i) For determining the size of the limit, the credit facilities granted by the Bank alone shall be
taken into account.
ii) Wherever any loans and advances are sanctioned the size of the limit shall be determined at the
time of sanction by aggregating the following:
a) Sanctioned amount (original advance) of all the existing short term loans as well as term
loans including term loans refinanced by IDBI/SIDBI.
b) Existing credit limits, if any, not sought to be renewed/enhanced.
c) Amount of fresh loan/s sanctioned.
d) Amount of fresh/renewed/enhanced credit limits sanctioned.

However the following types of advances may be excluded for the purpose of aggregation:
(a) LD/ODD (f) Non-fund based credit limits
(b) Jewel Loans (Priority/Non priority sector) (g) PBS Loans
(c) Premises loans (h) Credit card dues/outstandings.
(d) Housing loans
(e) Combined Harvester/two/three/four wheeler/Tractor loans under agriculture

iii) The size of the credit limits should be determined/ revised only at the time of sanction of
Fresh/renewed/enhanced loans/credit limits. The same should not be revised subsequently
merely on account of revision in rates of interest, decrease or increase in the balance
outstanding in the loans or closure of some of the credit facilities.

3) Procedure for collection of interest on local cheques/drafts purchased:


In the case of purchase of local cheques/drafts, normal interest/discount at the applicable rates for
number of days funds advanced, remain outstanding shall be collected. Overdue interest as
indicated in Annexure-7 shall be charged over the applicable rates from the date of purchase of the
instrument, when the instrument is returned unpaid. This rule is not applicable for immediate credit
of local cheques upto Rs.15,000/-.

4) Interest on adhoc limits:


On adhoc limits (other than export finance) additional interest at 1% over the rate applicable for
the respective category shall be charged.

5) Interest on Restructured Accounts:


Levy additional interest @ 0.50% on all restructured accounts, except Housing Loans, Loans upto
Rs.2.00 lakhs, all Agriculture Loans, Loans to Micro Enterprises and Government Sponsored
Schemes.

6) Interest on Unrated Borrowers:


Levy additional interest @ 2% on all Unrated borrowers with exposures of Rs.10.00 crore and
above
Circular No.158-2010-BC-RMD-10 / 30-06-2010 15

7) In the case of sick industrial units which are already placed under approved nursing programme,
rate of interest stipulated at the time of implementing the package will continue subject to annual
review in terms of RBI guidelines. In the case of viable sick industrial units to be placed under
nursing programme in future, rates of interest may be stipulated as per parameters laid down by
RBI, which have been communicated from time to time.

8) Consortium advances:
RBI has vide Cir.No.IECD.28/08.12.01/94-95 dated 22.11.1994 advised that in the case of
consortium advances each member bank is free to decide the rate of interest to be charged on the
portion of the credit limits extended by it to the borrower. Hence, the rates of interest furnished in
the standard interest rate tables are applicable for consortium advances also.

For agreeing in consortium meeting for charging uniform rate of interest which is less than the rate
furnished in the standard interest rate tables prior approval of the Corporate Office shall be
obtained before falling in line with the consortium decision. However such rate of interest shall not
be below the base rate. On the other hand if the leader/consortium decides to charge the rate higher
than the rates furnished in the standard interest rate tables, such higher rate shall be charged
subject to a ceiling of BR + 6.75%.

9) Definition of Term loan:


Term loan means a loan repayable within a period of not less than 36 months as clarified by
Reserve Bank of India.

10) Debit balance in SB/Current Account:


In the case of debit balances allowed in SB/Current Account, interest rate at BR + 6.75%
(presently 15.00% p.a), shall be charged from the date of allowing debit balance up to the
stipulated period (30/15 days) and overdue interest thereafter.

11) Charging interest at monthly rests:


Interest on all loans and advances shall be charged at monthly rests. However, following
categories of loans and advances are exempt from being charged at monthly rests

i) Advances against term deposits.


ii) Agricultural advances.
iii) Bills Discounting (i.e CDD, CBD, DBD, DATBD, FCBP, FDBP, FUBP, FIBP, etc).

12) Calculation of interest on advances in leap year: For the purpose of calculation of interest
on loans and advances in a leap year, number of days shall be taken as 365 and not 366.

WOX
16 Circular No.158-2010-BC-RMD-10 / 30-06-2010

Annexure-9

(For all new loans / borrowers till the existing formats are exhausted)

I have executed today the loan documents for __________________ facility totaling to
Rs.___________ (Rupees _______________________________________________only). In the loan
documents/agreements, the rate of interest is specified with reference to Banks Prime Lending Rate/
Prime Term Lending Rate. I am aware that RBI has permitted the Bank to introduce interest linked to
Base Rate system from 01-07-2010, which is applicable to and binding on the Bank as well as the
general public/borrowers. I am agreeable for the said Base Rate system as communicated to me. I
hereby agree/consent and undertake that I will repay the above mentioned credit facility with interest
linked to Base Rate of the Bank, which is at present _______% p.a. subject to changes from time to
time.

I confirm that this undertaking can be read in addition to the documents executed by me as if
this is forming part and parcel of the loan documents.

Borrower/Surety
*Any reference to singular includes plural and vice versa.

WOX

Annexure -10

(For existing borrowers who opt for Base Rate)

I have availed the following facilities on __________________ which is repayable with interest
structure linked to Prime Lending Rate / Prime Term Lending Rate of the Bank. The loan documents /
agreement executed by me also refer to PLR / PTLR only. I am aware that RBI has permitted the Bank
to introduce Base Rate system from 01-07-2010 and it has given an option to the existing borrowers to
select Base Rate system.

Exercising the option given to me by RBI / Bank, I prefer and agree to pay the interest linked to
new Base Rate structure, which is at present ________ .% p.a. subject to changes from time to time,
instead of old BPLR system. This option is irrevocable. I confirm that other terms and conditions of the
loan documents remain unchanged.

I further confirm that this undertaking can be read in addition to the documents executed by me
as if this is forming part and parcel of the loan documents.

Borrower/Surety

* Any reference to singular includes plural and vice versa.

WOX