UP MSMEs expect hike in lending rates

In the wake of recent hike in key policy rates by the Reserve Bank of India, Micro, Small and Medium Enterprises (MSMEs) in Uttar Pradesh are expecting funds to get costlier for the sector in coming weeks.

“We expect that the credit rate would harden soon and the same would be true for our sector,” MSME chamber, Indian Industries Association (IIA), president, Anil Gupta told Business Standard.

On July 27, the central bank had hiked the repo and reverse repo rates by 25 and 50 basis points to 5.75 and 4.50 respectively. Taking the cue, major banks have already raised deposit rates by almost 100 basis points and there are talks of hike in credit rates in near future.

He said the government should reframe policies to support the sector, as it had a major stake in the industrial development of the country. Uttar Pradesh has a large MSME base and the total number is estimated at 1.2 million.

Gupta said it would be double whammy for the sector, which was already operating under ‘wafer-thin’ margins with little support from the government. “We should learn from China, which gives major incentives for the promotion of the industrial sector, including funding” he added. He claimed that Lucknow had no land bank for setting up of industrial units.

IIA has launched a financial consultancy cell to promote MSME entrepreneurship. The chamber already had expert panels on different subjects relevant to MSMEs. It has nominated veteran professionals with experience, in Technical & Financial Project Appraisal and Rehabilitation of sick units for providing financial consultancy.

“Finance is one of the priorities for both existing as well as potential entrepreneurs, who need expert advice pertaining to funding proposals for new projects, expansion, modernisation and diversification of industry,” Gupta added.