AMN
Finance Minister Nirmala Sitharaman today said that banks interest rates will have to be far more affordable.
“The cost of borrowing is really very stressful. And at a time when we want industries to ramp up and move building capacities, bank interest rates will have to be far more affordable,” Sitharaman said at the 11th SBI Banking and Economics Conclave 2024.
The interest rate or repo rate of Reserve Bank of India (RBI) is currently at 6.50 percent. The central bank has been keeping interest rates at this level since the last 10 monetary policies.
The RBI in the October monetary policy has changed the stance to neutral from withdrawal of accommodation.
Sitharaman said banks should target lending of 6.12 lakh crore rupees for FY-2025-2026 and 7 lakh crore rupees for FY 2026-2027 to MSMEs.
She was speaking while delivering the keynote address at the 11th SBI Banking & Economics Conclave in Mumbai today. Its theme was ‘Making Aspiration of Viksit Bharat a Reality’.
Ms Sitharaman said in 2013-14, India emerged as the 10th largest economy. After that, the economy grew rapidly and by 2021-22 it reached the 5th position. She expressed hope that in the next few years, India will be reaching the 3rd position.
“…when you look at India’s growth requirements, you can have so many different voices coming out and saying, the cost of borrowing is really very stressful. At a time when we want industries to ramp up and move building capacities… bank interest rates will have to be far more affordable,” Sitharaman said at State Bank of India (SBI’s) annual business and economic conclave. Retail and small borrower lending rates are linked to the Reserve Bank of India’s policy repo rate, while corporate loans depend on the marginal cost of funds-based lending rate (MCLR).
“India periodically and cyclically suffers from adequate supply of perishable commodities. We as a government are making a lot of efforts towards scientific and more rigorous storage facility for perishable commodities. So till you really get on the top of that issue, you will periodically have this problem of tomatoes, onions and potatoes, causing immense stress in a cyclical fashion,” Sitharaman said.
India’s retail inflation rose to a 14-month high of 6.2 percent in October from 5.5 percent in the previous month, as food inflation galloped on the back of rising vegetable prices.