MSMEs seek cut in interest rates

New Delhi, Mar 31 (KNN) Amidst very strong demand from the industry, particularly the micro, small and medium enterprises (MSMEs), for a cut in the interest rates, the Reserve Bank of India (RBI) will be unveiling the first credit policy for the fiscal 2014-15 tomorrow.

MSME industry is hopeful that RBI Governor Raghuram Rajan will take cognisance of their ongoing plight and reduce the repo rate by 25 basis points (bps), said Executive Director, PHD Chamber of Commerce and Industry, Saurabh Sanyal.

On the other hand, President, Associated Chambers of Commerce and Industry of India (ASSOCHAM) Rana Kapoor urged the RBI to cut the repo rate by at least 50 bps to bolster growth and revive business sentiment as inflation moderates.

The annual rate of inflation, based on the monthly wholesale price index, stood at 4.68 per cent in February.  Further, retail inflation was at a 25-month low of 8.1 per cent last month.

Echoing similar sentiments, Director General, Confederation of Indian Industry (CII) Chandrajit Banerjee said the industry is hoping for a 50 bps cut in the repo rate as retail inflation has started receding.

However, most economists polled by Federation of Indian Chambers of Commerce and Industry (FICCI) said that the RBI would keep the rate unchanged on April-1 and continue its close vigil on inflation.

In its third-quarter review of monetary policy in January, the bank raised the key repo rate by 0.25 per cent to 8 per cent in a bid to curb inflation.

Since he took charge in September 2013 as RBI Governor, Raghuram Rajan has raised the interest rate three times.