RBI may again disappoint MSMEs tomorrow
Updated: Oct 28, 2013 03:45:48pm
New Delhi, Oct 28 (KNN) The Reserve Bank of India will be reviewing the credit policy tomorrow amidst dim chances of cut in interest rates. On the other hand, RBI may increase interest rates, further increasing the interest burden of the micro, small and medium enterprises.
The micro, small and medium enterprises which have seen a dismal growth in credit flows in the current financial year would find it even more difficult if the interest rates are increased.
Meanwhile, reflecting the economic slowdown, the credit deployment by banks into micro and small units for the current financial year has grown by a mere 2.8 per cent. However, the credit growth to the sector in the previous fiscal was 20 per cent.
With the current trend, credit growth to this sector is unlikely to catch up by year end and reach the level of the previous year.
But in the case of medium enterprises, things are slightly better. So far, credit deployment to this category has grown by eight per cent, when according to RBI data, it was 2.3 per cent in the previous year.
Large enterprises on the other hand, too have shown a dismal growth of 4.5 per cent so far, when the growth for the whole year was 18.2 per cent in 2012-13.
Across all three categories, the micro and small units seem to be reverse performing.
Expressing similar sentiments, ICICI Bank Managing Director and CEO Chanda Kochhar recently said that small and medium sized companies are facing more vulnerability in terms of quality of assets in the backdrop of economic slowdown.
“The small and medium enterprises sector is more vulnerable than others,” she said in an interview with the Financial Express after India’s largest private sector bank came out with the quarterly results for July-September, 2013.
She said while some of the macro-economic indicators are showing improvement, the banks and the corporates would continue to face the problem of cash problem for some more time. “As far as asset quality is concerned, the pressure on cash flows is going to continue for some time. So, there I don’t think we are at the end of the challenges,” Kochhar said. (KNN Bureau)
The micro, small and medium enterprises which have seen a dismal growth in credit flows in the current financial year would find it even more difficult if the interest rates are increased.
Meanwhile, reflecting the economic slowdown, the credit deployment by banks into micro and small units for the current financial year has grown by a mere 2.8 per cent. However, the credit growth to the sector in the previous fiscal was 20 per cent.
With the current trend, credit growth to this sector is unlikely to catch up by year end and reach the level of the previous year.
But in the case of medium enterprises, things are slightly better. So far, credit deployment to this category has grown by eight per cent, when according to RBI data, it was 2.3 per cent in the previous year.
Large enterprises on the other hand, too have shown a dismal growth of 4.5 per cent so far, when the growth for the whole year was 18.2 per cent in 2012-13.
Across all three categories, the micro and small units seem to be reverse performing.
Expressing similar sentiments, ICICI Bank Managing Director and CEO Chanda Kochhar recently said that small and medium sized companies are facing more vulnerability in terms of quality of assets in the backdrop of economic slowdown.
“The small and medium enterprises sector is more vulnerable than others,” she said in an interview with the Financial Express after India’s largest private sector bank came out with the quarterly results for July-September, 2013.
She said while some of the macro-economic indicators are showing improvement, the banks and the corporates would continue to face the problem of cash problem for some more time. “As far as asset quality is concerned, the pressure on cash flows is going to continue for some time. So, there I don’t think we are at the end of the challenges,” Kochhar said. (KNN Bureau)
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