Chamber of Small Industry Associations (COSIA) has asked the Reserve Bank to put a ceiling on interest rates charged by banks on the small and medium enterprises. In a statement the COSIA said that RBI’s repeated rate hikes have failed to curb inflation even as the domestic investors are feeling the pinch. The Chamber President M.R. Khambete said that the base rate of banks between July 2010 and May 2011 has gone up by 150-300 basis points affecting the credit growth. The repeated hikes of the key policy rates has not brought out the desired results and hence the RBI must now look for some innovative measures to contain inflation, it added. The Chamber said the SMEs have suffered due to rise in interest rates and RBI could think of putting a ceiling on the rate of interest charged to SMEs, he said. Inflation, as measured by the Wholesale Price Index (WPI), was over 9 per cent in May. To check inflation RBI has raised its key policy rates 10 times in a year-and-a-half. The latest hike was of 25 basis points hike in short-term lending and borrowing rates which was announced on June 16.
The Hindu
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