FIEO Hopes for Better Credit Demand after RBI Interest Cut

Commerce Minister Support Interest Rate Subsidy and Tax Breaks to Revive Crashing Exports

S C Ralhan, President, Federation of Indian Export Organisations (FIEO), while commenting on the rate cut by 50 basis points to 6.75%, stated that this would stimulate credit off-take which had fallen to levels of 8.6% from 12.6% in the corresponding period last year.

FIEO chief stated that the dismal policy transmission prompted RBI to appeal to banks and issue draft guidelines that require banks to use the ‘marginal cost of funds’ method for base rate. The computation which would be implemented only from 1st of April 2016 and even with this a cap on the spread on loans needs to be announced so that the base rate effectively reflects the floor rate.