Commerce and Industry Minister Nirmala Sitharaman has pitched for as much as 200 basis points interest rate cut by Reserve Bank of India (RBI) to boost Small and Medium Enterprises (SMEs) and create jobs. Sitharaman who also heads the SME Ministry said that “I still hold that the cost of credit in India is high. Undoubtedly, particularly MSMEs which create a lot of jobs contribute to exports… are all hard pressed for money and for them, approaching a bank is no solution because of the prevailing rate of interest. I have no hesitation to say, yes 200 bps (2%), I would strongly recommend.”
The minister said that SMEs access to credit is based on real environment in which they are doing business, world over interest rate is low equally, income generation/ jobs are important and also added that for long periods, if rates would remain high SMEs would not be able to afford the borrowing. Undoubtedly, particularly SMEs which create a lot of jobs contribute to exports are all hard pressed for money and for them, approaching a bank is no solution because of the prevailing rate of interest.
She said that for long periods, if rates would remain high SMEs would not be able to afford the borrowing. The minister also said she will take up the matter with the Finance Minister about directing banks to pass on benefits of the rate cuts to the industry.