The government and RBI played watchdog by insisting on commercial banks to come to the rescue of SMEs over the rising interest rates of late – almost a dozen interest hikes announced over the past 12 months.
Indian Overseas Bank’s Chairman and Managing Director M Narendra said recently in Mangalore that his bank would increase the repayment period for the borrowers especially in the SME segment. Not only IOB, even Vijaya Bank is planning a loan restructuring for the benefit MSMEs who are hit by the steep rise in interest rates and a slowing economy. Addressing the delegates at the Kanara Chamber of Commerce and Industries (KCCI), chairman and managing director H S Upendra Kamath said that the bank had put forth an option before the customers to reduce their burden of repaying last week.
MSME Secretary Uday Kumar Varma has gone on record that higher interest rates have been inhibiting investment in the sector and manufacturing is likely to suffer. Meanwhile, the Federation of Indian Export Organisations (FIEO) has called on the Reserve Bank to open a Libor-linked forex loan facility for exporters, especially the small and medium ones, to help them overcome the fund crunch. Quoting the latest RBI data, FIEO President Ramu S Deora said the rising interest rates have impacted credit off take by 2 percentage points, which has shrunk to 18.5 percent, says agency reports.
