2011-08-05

RBI's rate hike impacts SMEs

A continuous rate hike strategy by RBI has impacted SMES

RBI's rate hike impacts SMEs

Continuous policy rate hikes by Reserve Bank of India (RBI) consecutively for twelve times have thrown many small and medium enterprises (SMEs) out of business and others are on the brink of being out of business, an industry body survey revealed.

This is a matter of serious concern. RBI's continued strategy of increasing lending rates without attempting to address the issues of high credit cost to the SME sector may lead to more non-performing assets (NPAs) of banks, as high raw-material cost and low margins would put pressure on SMEs, leading to their inability to repay loans, said survey conducted by ASSOCHAM.

"...increased cost of inputs may affect their (SMEs) ability to service loans/interest commitments and may be a major factor for increased NPAs of banks," it said.

ASSOCHAM said that the continued increased fuel prices, ever increase in lending rates are the worst hit and could be heading for a serious trouble.

SMEs have shared that there has been a decline of around 15 percent market share of SMEs, 20 percent in their profit margins and 24 percent reduction in total production capacity, which are serious subjects.

Therefore, ASSOCHAM survey has revealed the serious undercurrent of the financial position and its impact on the rising cost of funds, consequent upon undeterred hike in key policy rates of RBI, affecting one of the most important sectors of the economy—the SMEs.

Related opportunities
  • Fashion Accessories
    We are an Indian Origin Fast – Fashion Lifestyle Product..
    Locations looking for expansion Gujarat
    Establishment year 2021
    Franchising Launch Date 2023
    Investment size Rs. 20lakh - 30lakh
    Space required 800
    Franchise Outlets -NA-
    Franchise Type Unit
    Headquater Rajkot Gujarat
  • Incorporated in 1984, Relaxo is the largest footwear manufacturer in..
    Locations looking for expansion Delhi
    Establishment year 1976
    Franchising Launch Date 2000
    Investment size Rs. 10lakh - 20lakh
    Space required 1000
    Franchise Outlets -NA-
    Franchise Type Unit
    Headquater New delhi Delhi
  • Professional Education Colleges
    Cambridge Learning Partner Programme is a partnership for IELTS preparation..
    Locations looking for expansion Delhi
    Establishment year 2022
    Franchising Launch Date 2023
    Investment size Rs. 20lakh - 30lakh
    Space required 1500
    Franchise Outlets -NA-
    Franchise Type Unit
    Headquater New Delhi Delhi
  • Departmental/Unisex
    TT group is a vertically integrated textile company in India. It..
    Locations looking for expansion Delhi
    Establishment year 1950
    Franchising Launch Date 2023
    Investment size Rs. 10lakh - 20lakh
    Space required 300
    Franchise Outlets -NA-
    Franchise Type Unit
    Headquater New delhi Delhi
Insta-Subscribe to
The Franchising World
Magazine
tfw-80x109
For hassle free instant subscription, just give your number and email id and our customer care agent will get in touch with you
email
mobile
OR Click here to Subscribe Online
Daily Updates
Submit your email address to receive the latest updates on news & host of opportunities

Free Advice - Ask Our Experts

pincode
;
ads ads ads ads