- /e-circular

, . 13 . 433 /17-18
Micro, Small and Medium Enterprises MSMEs Sl. No. 13 O&M No. 433/17-18

Circular No. MSME/INTT RATE/ 13 /OM- 433/17-18 26-September-2017

ALL BRANCHES/OFFICES
STAFF TRAINING COLLEGES/ STAFF TRAINING CENTRES
ALL RSETIs/ ALL DEPARTMENTS AT HEAD OFFICE

Subject: Revision in Rate of Interest for MSME advances.

Priority Sector advances are thrust area of lending for the Bank. Under priority sector
advance, MSME credit not only contributes towards employment generation but also imparts
better yield in comparison to other segments.

We have observed that in the recent past many banks have reduced their pricing against
MSME loans; consequently the Bank has felt a challenge in pricing of MSME advances. To
provide competitive interest rate, aligned with the industry, for acquisition of quality MSME
advance, Bank has decided to reduce the rate of interest applicable for MSME borrowers in
order to:

a) To retain the existing quality MSME borrowers.

b) To attract and bring the new entrepreneurs in our fold.
c) To achieve the targets associated with MSE sector.

Accordingly, the revised interest rates applicable for MSME borrowers w.e.f. 03.10.2017 are
as under :

Loan Limit Existing ROI Revised ROI Applicable

(MCLR Y = 8.75%) (MCLR Y = 8.75%) Reduction
Limit upto Rs.10.00 MCLR-Y + 2.30% = 11.05 % MCLR-Y+2.00% = 10.75% 30 bps
lac
Limit above Rs.10.00 Lac based upon credit rating
UBICR-0 MCLR-Y + 1.80% = 10.55 % MCLR-Y+1.25%= 10.00% 55 bps
UBICR-1 MCLR-Y + 2.05% = 10.80 % MCLR-Y+1.50%= 10.25% 55 bps
UBICR-2 MCLR-Y + 2.55% = 11.30 % MCLR-Y+2.00%= 10.75% 55 bps
UBICR-3 MCLR-Y + 3.30% = 12.05 % MCLR-Y+2.75%=11.50% 55 bps
(Entry Level)
UBICR-4 MCLR-Y + 3.80% = 12.55 % MCLR-Y+3.25% = 12.0% 55 bps
UBICR-5 MCLR-Y + 4.80% = 13.55 % MCLR-Y+4.25%= 13.00% 55 bps
With aforesaid modification in rate of interest for MSME loans, Banks earlier circular ref. no.
RMD/MCLR-ROI/5/OM-192/17-18 dated 16.06.2017 stands revised, however additional
discount/concession with specified collaterals would remain applicable as per existing
guidelines.

As per RBI guidelines no collateral should be insisted upon for MSE loan upto Rs.10 lacs.
Accordingly, no concessional rate is applicable for MSE loans upto Rs.10 lacs. However, for
loan accounts above Rs.10 lacs, the additional discount/ reductions in rate of interest based
on percentage(%) of collateral security offered by the borrowing MSME units would be as
under :

Percentage collateral security offered Discount /Reduction in ROI

75% and above upto 100% 0.25%
100% and above 0.50%

Aforesaid rate of interest for MSME loans will be applicable for fresh/new loans along with
the loans at the time of their annual review/renewal.

All concerned are advised to take note of the instructions and ensure strict compliance of the
same.

General Manager
(MSME, Govt. Transaction & CFO)