BackBanks not understanding problems of MSMEs: Nirmala Sitharaman
Commerce and industry minister Nirmala Sitharaman reiterated her suggestion for 2% interest rate cut by the RBI to help the cash-starved MSME sector
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New Delhi: Union minister Nirmala Sitharaman on Sunday said banks are not fully understanding the problems faced by small and medium enterprises, whose performance has been hit by the high interest rate regime.
Twitter users drew her attention to the issue saying it is for the industries to manage their funds and banks can only lend.
Sitharaman replied: “But, the argument here is 1. Banks haven’t been understanding enough of #SMEs. 2. High interest rates for long period".
The commerce and industry minister had last week pitched for a 2% cut in interest rate by the Reserve Bank of India (RBI) to help the cash-starved micro, small and medium enterprise (MSME) sector.
“I still hold that the cost of credit in India is high. Undoubtedly, particularly MSMEs, which creates 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 basis points, I would strongly recommend," she had said. One basis point is one-hundredth of a percentage point.
The RBI, which has maintained key interest rate at 6.5% since April this year citing inflationary concerns, is scheduled to hold its next policy review on 4 October.
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