SMEs demand immediate interest rate cut ranging b/w 100-150 basis pts.
A whopping 93 per cent of industries in the SME sector opine that the Reserve Bank of India’s (RBI) decision to keep the interest rate unchanged was completely out of line, according to a quick poll conducted by the apex industry body ASSOCHAM.
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) conducted a telephonic interview with about 100 small and medium enterprises (SMEs) across India during the last fortnight to ascertain their views on RBI’s decision of not to change the interest rates in its mid-quarter monetary policy review on June 18.
Besides, about 86 per cent of the respondents said that high rate of interests is having a negative impact on their business as their organizations droop under the burden of ever-rising lending rates and rest of them said this move will not impact their trade much as they are not heavily dependent upon bank finances, highlights the survey conducted by the ASSOCHAM Research Bureau (ARB).
“The SME sector had already been grappling with macro-economic slowdown together with global uncertainty and rising interest rates put an extra burden on these small capital organizations which are heavily dependent upon the banks for their finance requirements,” said D.S. Rawat, secretary general of ASSOCHAM while releasing the findings of the survey.
The ASSOCHAM representatives also tried to ascertain the impact of high costs of borrowing on the firms’ business to which about 43 per cent respondents said their cost of credit had increased by about 5-10 per cent while about 32 per cent respondents said their cost of credit soared by up to five per cent. While about 18 per cent did not respond, of the remaining about three per cent said their cost of credit has increased by about 10-15 per cent and four per cent respondents said cost of credit increased by over 15 per cent.
ASSOCHAM also sought the firms’ views on their investment decisions considering the decelerating industrial performance and drying investments to which about 79 per cent of respondents said their investment plans had been adversely impacted by RBI’s current move.
Apart from this, about half of the overall respondents also reckoned that investments had declined by about 5-10 per cent, while 21 per cent did not respond to this about 11 per cent said investments declined by about 10-15 per cent and an equal number of respondents said it had declined by up to five per cent. A meager seven per cent respondents felt that investments had declined by over 15 per cent.
ASSOCHAM sought the feedback of the SME industry as to how much they wanted the RBI to interest rates to help revive the growth of the industry. About 39 per cent of respondents reckoned that the apex bank should immediately cut down the interest rates by 150 basis points, while about 36 per cent said the interest rates should be brought down by 100 basis points.
According to ASSOCHAM, there are about 31.1 million MSMEs across India employing over 73 million people and produce over 6,000 different products. Besides, the sector contributes about 40 per cent of India’s gross exports and 45 per cent of country’s manufacturing output.
A whopping 93 per cent of industries in the SME sector opine that the Reserve Bank of India’s (RBI) decision to keep the interest rate unchanged was completely out of line, according to a quick poll conducted by the apex industry body ASSOCHAM.
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) conducted a telephonic interview with about 100 small and medium enterprises (SMEs) across India during the last fortnight to ascertain their views on RBI’s decision of not to change the interest rates in its mid-quarter monetary policy review on June 18.
Besides, about 86 per cent of the respondents said that high rate of interests is having a negative impact on their business as their organizations droop under the burden of ever-rising lending rates and rest of them said this move will not impact their trade much as they are not heavily dependent upon bank finances, highlights the survey conducted by the ASSOCHAM Research Bureau (ARB).
“The SME sector had already been grappling with macro-economic slowdown together with global uncertainty and rising interest rates put an extra burden on these small capital organizations which are heavily dependent upon the banks for their finance requirements,” said D.S. Rawat, secretary general of ASSOCHAM while releasing the findings of the survey.
The ASSOCHAM representatives also tried to ascertain the impact of high costs of borrowing on the firms’ business to which about 43 per cent respondents said their cost of credit had increased by about 5-10 per cent while about 32 per cent respondents said their cost of credit soared by up to five per cent. While about 18 per cent did not respond, of the remaining about three per cent said their cost of credit has increased by about 10-15 per cent and four per cent respondents said cost of credit increased by over 15 per cent.
ASSOCHAM also sought the firms’ views on their investment decisions considering the decelerating industrial performance and drying investments to which about 79 per cent of respondents said their investment plans had been adversely impacted by RBI’s current move.
Apart from this, about half of the overall respondents also reckoned that investments had declined by about 5-10 per cent, while 21 per cent did not respond to this about 11 per cent said investments declined by about 10-15 per cent and an equal number of respondents said it had declined by up to five per cent. A meager seven per cent respondents felt that investments had declined by over 15 per cent.
ASSOCHAM sought the feedback of the SME industry as to how much they wanted the RBI to interest rates to help revive the growth of the industry. About 39 per cent of respondents reckoned that the apex bank should immediately cut down the interest rates by 150 basis points, while about 36 per cent said the interest rates should be brought down by 100 basis points.
According to ASSOCHAM, there are about 31.1 million MSMEs across India employing over 73 million people and produce over 6,000 different products. Besides, the sector contributes about 40 per cent of India’s gross exports and 45 per cent of country’s manufacturing output.
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