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SMEs Need Lower Rates, Support To Beat Disruptions: Sanjeev Sanyal

The RBI’s central board advised the regulator to provide relief to SME borrowers. But where is it stemming from?

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Among the nearly dozen issues being debated between the government and the Reserve Bank of India is the issue of support to small and medium enterprises.

Following a meeting last week, the RBI’s central board advised the regulator to consider providing relief to SME borrowers. But where is that demand stemming from?

The government’s Principal Economic Adviser Sanjeev Sanyal says that SMEs have faced the brunt of some of the structural changes in the economy and may now need some support. Apart from the near-term concerns, Sanyal said that the real rate of interest for SMEs remains too high.

Commenting on the discussions to put in place a new economic capital framework for the RBI’s balance sheet, Sanyal said that any transfers from the RBI’s reserves, if required, would be staggered over a period of time.

(This article was first published on BloombergQuint and has been republished with permission.)

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