RBI ups lending rates; but promises more finance to MSMEs

Mumbai, Oct 29 (KNN) The Reserve Bank of India (RBI) today increased the benchmark lending rate by 0.25 percentage points but its governor, Raghuram Rajan assured the small and medium enterprises that they would be given more bank credit by reaching out to the poor and remote areas.

In the second quarter review of the Monitory Policy, the RBI balanced the increase in the repo lending rate by reducing the rate on Marginal Standing Facility (MSF), at which most of the banks borrow.

However, the policy left the industry disappointed, which is feeling the pinch of high cost of borrowing.

However, Rajan reiterated his promise to expand banking access to small and medium enterprises, “We planned to build the RBI measures over the next few quarters on five pillars.”

Amongst others, one of these pillars is, “expanding access to finance to small and medium enterprises, the unorganised sector, the poor, and remote and underserved areas of the country through measures to foster financial inclusion.”

The strategy to expand financial inclusion will be informed by the Dr Nachiket Mor Committee report, though significant efforts to explore the use of technology are already underway.   Finally, some steps to improve restructuring and recovery will be announced soon, the RBI Governor added.