Friday, May 14

KFC cuts interest rates for manufacturing and service sectors

As a special drive to support industrial sectors of the state, Kerala Financial Corporation (KFC) has cut interest rates for manufacturing and service sector loans. The interest rates of service sector loans will come down up to 1% from existing rates.

“This is the biggest cut in interest rates by KFC.It will benefit thousands of manufacturing, industrial and service sector units of the State. The corporation could reduce its cost of fund by mobilizing low cost funds from the market, FI and Banks and the benefit is passed on to customers”, said Sanjeev Kaushik, CMD of the corporation.

Currently Corporation’s loans are link to base rate of 9.5% and each loan is placed in one of the seven bands of interest structure based on their credit rating. Even though base rate system was introduced, some of KFC customers have not been benefitted in base rate system because of the higher spreads. Also some customers following PLR regime have not switched over to base rate system as they were not getting the interest benefit if opted for new base rate system. Now the interest rate structure is simplified by reducing the bands from seven to five bands. Also the rates of service sector were 0.5% higher than manufacturing sector.

“In revised system the rates of manufacturing and service sectors loans are merged and hence service sector customers will get benefit up to 1% reduction in interest rates. Since the bands are merged, many of the manufacturing sector loans will also get benefit up to 0.5%,” said Kaushik.

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