A recent press report said that the National Small Industries Corporation (NSIC), a major lender to small and medium enterprises, has announced that it will pass on the increase in interest rates to the borrowers.
Mr. H. P. Kumar, Chairman and Managing Director, NSIC said while said that the rising interest rates were causing hardship to the country’s small and medium enterprises (SMEs). He said that for SMEs, both availability and the cost of borrowings are the major problems. He also said that globally loans are available at 4-5 per cent where as in India the SMEs have to pay around 15 per cent
Reports said that the NSIC has tie-ups with Yes Bank, Axis Bank and Central Bank of India in order to offer loans to the entrepreneurs.
The Reserve Bank of India on Friday, increased the policy interest rate (repo) by 25 basis points, it’s the 12th hike since March 2010. The key interest rates have increased by 350 basis points in the last 18 months. NSIC has planned to pass on the hike in interest rates to the borrowers, i.e. it is likely to hike its loan rates.