Union Bank has taken a series of measures to help the micro, small and medium enterprises (MSMEs) facing liquidity crisis, including rescheduling of loans, on a case by case basis, top sources at the bank said.

''The global turmoil has affected the MSME sector and the bank wants to reduce the severity of the pain,'' said M V Nair, chairman and managing director.

He, however, said while the slowdown in economy has affected the sector most, it has not resulted in higher NPA levels for the bank, which worked out to 1.24 per cent as of September 2008.

Although the possibility of higher NPAs cannot be ruled out as the scenario unfolds, he said the bank has taken a proactive approach to the issue.

Union Bank will offer ad hoc advances and offer extended stock holding period as also reschedule loans on a case by case basis to ease liquidity problem in the sector, he said.

Also, the bank, he said, will extend the period of credit on bill purchases and reduce margin payments wherever warranted.

Union Bank, he said, has identified industrial clusters in places like Ludhiana, Pune, Jamshedpur, Tirupur, Surat and Waranasi, where it expects small and medium business units to be hit most by liquidity problems.

Meanwhile, the State Bank of India, the country's largest lender, is expected to cut lending rates following last week's reduction in the repo and reverse repo rates by the Reserve Bank of India.

''We are going to review rates," SBI chairman O P Bhatt said after the RBI announced a 100 basis point reduction in repo and reverse repo rates to 6.5 per cent and 5 per cent, respectively, effective Monday.

Major lenders such as HDFC Bank, Union Bank and Yes Bank have also cut their benchmark prime lending rates by 50 basis point each.
 
SBI had, last month, reduced benchmark prime lending rate by 75 basis points to 13 per cent.