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05/10/2019 08:51am

MSMEs still to get benefits of lower lending rates

image MSMEs still to get benefits of lower lending rates

New Delhi, Oct 5 (KNN) Despite Reserve Bank of India's (RBI's) steady rate cuts, the benefits have not been able to pass on to the Micro, Small and Medium Enterprises (MSMEs) as some of the banks are not passing on the benefits of lower lending rates.

RBI has been trying to make loan cheaper for corporates and consumers by cutting the repo rate but commercial banks have generally been reluctant in effecting a commensurate cut in interest rate for customers.

"There hasn't been any change on the ground. The prime lending rates (PLRs) which the banks are charging are the same at around 10 per cent," said Animesh Saxena, President of Federation of Indian Micro Small & Medium Enterprises (FISME).

''We have not seen them cutting the rates for MSMEs or the industry at least in the last three months. We expect them to reduce interest rates in the festive season for automobile and other personal loan category,'' he added.

On Friday, RBI had cut the repo rate by 25 basis points to 5.15 per cent from 5.40 per cent. This is the fifth straight cut in lending rate taking the cumulative interest rate reduction to 135 basis points since February this year.

All the members of RBI's MPC voted unanimously to reduce repo rate and maintain an accommodative stance with regards to monetary policy.

The 25 bps rate cut is in line with the predictions of economists, who said that that RBI is likely to reduce the key lending rate to aid the government in its mission to boost economic growth.



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