New Delhi, July 22 (KNN) The State Bank of India has raised the penal interest from 2% to 5% in case of non-adherence to agreed terms & conditions including delays and non-financial stipulations, according to sources.

It means, if the installments are not received as per the repayment terms and any stipulations are not met, the bank will impose penalty interest of 5% which is too high and higher penalties often lead to corruption, affirmed by one of the entrepreneurs in the name of anonymity.

The entrepreneur claims that bank officials are arm twisting in the name of penal provision.

He said that the move would give big jolt to MSMEs because for any short term default they are forced to pay heavy amount.

It is pertinent to mention that MSMEs have stressed cash flow because of delayed cash payment from large companies, he added.

Other fallouts he mentioned that the customers are miffed by this unilateral / adhoc stipulations and competitive banks are using this as a tool to influence SBI customers.