• Rajasthan

    Cong 100
    BJP 73
    RLM 3
    OTH 23
  • Madhya Pradesh

    Cong 115
    BJP 106
    BSP 2
    OTH 7
  • Chhattisgarh

    Cong 63
    BJP 18
    JCC 9
    OTH 0
  • Telangana

    TRS-AIMIM 94
    TDP-Cong 22
    BJP 1
    OTH 2
  • Mizoram

    MNF 26
    Cong 5
    BJP 1
    OTH 8

* Total Tally Reflects Leads + Wins

Banks responsible for sick medium and small enterprises: RBI dy Governor SS Mundra

By: | Published: April 9, 2017 3:39 AM

Reserve Bank of India deputy governor SS Mundra on Saturday held the banking system responsible for the growing sickness of the country’s medium and small enterprises.

Reserve Bank of India deputy governor SS Mundra on Saturday held the banking system responsible for the growing sickness of the country’s medium and small enterprises. (PTI)

Reserve Bank of India deputy governor SS Mundra on Saturday held the banking system responsible for the growing sickness of the country’s medium and small enterprises.

“A large number of MSMEs are getting sick and the responsibility of this lies squarely with the banks. Banks are the reason for a large number of MSME units falling sick. We have given several tools to encourage banks to give automatic enhancement in credit, all kinds of facilities have been provided, but they have not been used to the extent they should have been done,” he said, adding, “At the RBI, we feel dismayed that the sector is not getting the kind of attention that it needs to get.”

Speaking in Pune at the convocation of an institute, he said despite legislation and RBI guidelines for MSMEs, there is little awareness among unit operators about these initiatives. “I think it is high time for some focused attention on this,” he said.

The deputy governor also issued a stern warning to banks saying that they will be pulled up in the upcoming new supervisory cycle of the RBI for failing to adhere to the proper base rate reductions and also if they do not operationalise the internal ombudsman scheme. Mundra said banks have been not transparent in passing on the interest rate cuts to borrowers, nor have they migrated majority of loans to marginal cost of fund-based lending rate (MCLR).

He cited an example of a bank (without naming it), which has reduced the MCLR by 105 basis points (bps) in the last one year and reduced the base rate by only 10 bps while retaining 70% of customers in the base rate regime. He said it is likely that other banks are following the same. Mundra also said that one year after the internal ombudsman scheme was proposed, many banks, especially public sector banks, have not operationalised the scheme.

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