New Delhi, Aug 29 (KNN) Union Minister for Commerce and Industry (Independent Charge) Nirmala Sitharaman has said that Banks are not fully understanding the problems of the Small and Medium Enterprises (SMEs) whose performances have hit due to high interest rates.

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 saying, “But, the argument here is 1. Banks haven't been understanding enough of SMEs 2. High Interest rates for long period.”

Sitharaman last week said she would not hesitate in asking the Reserve Bank of India (RBI) to cut its key policy rate, repo rate, by 200 basis points (bps) or 2 percentage points to help the cash starved micro, small and medium enterprises (MSME).

“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, I would strongly recommend,” Sitharaman told reporters in New Delhi.

The RBI, which has unchanged key interest rate at 6.5% since April this year citing inflationary concerns, is scheduled to hold its next policy review on 4 October.

Replying to a tweet, Sitharaman also said that, “May be useful in this debate if you can share as to how much of these bad loans is contributed by SMEs.” (KNN Bureau)