Union Commerce and Industry Minister Nirmala Sitharaman on Wednesday called on the Reserve Bank of India to cut its interest rates by 2%, or 200 basis points, according to PTI. Sitharaman said the move would allow the Micro, Small and Medium Enterprise sector to access more money from banks at lower rates.
Sitharaman said that MSMEs create jobs and contribute to the country’s exports but are “hard pressed for money”. She added that approaching a bank was “no solution” because of the current rate of interest set by the RBI. The minister further said that she will also take up the matter with Finance Minister Arun Jaitley and ask him to direct banks to pass on benefits of any rate cuts to the MSME sector. “The competitiveness of smaller companies is affected purely because of [the] rate of credit,” she said.
While industry lobbies like the Confederation of Indian Industry have been calling for rate cuts to bolster manufacturing growth in the country, the Reserve Bank has maintained an interest rate of 6.5% since April this year. Its next policy review will be held on October 4 and will be chaired by Urjit Patel, who was recently announced as outgoing RBI Governor Raghuram Rajan’s successor.