Sitharaman bats for MSMEs, seeks 2% RBI rate cut

NEW DELHI: Commerce and industry minister Nirmala Sitharaman on Wednesday advocated for a repo rate reduction of 200 basis points by the Reserve Bank of India to

NEW DELHI: Commerce and industry minister Nirmala Sitharaman on Wednesday advocated for a repo rate reduction of 200 basis points by the Reserve Bank of India to aid cash-starved MSME sector.

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“I still hold that the cost of credit in India is high. Undoubtedly, particularly MSMEs which that a lot of jobs and 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, I would strongly recommend,” she said.

Repo rate is the rate at which banks borrow from the Central Bank. A lower repo rate translates to low interest rates on loans.

The minister, however, said that even as RBI has been cutting rates but banks have been holding and not passing on the relaxed rates. The minister also said she will take up the matter with the finance minister to direct banks to pass on benefits of the rate cuts.