If this is TRUE, then definitely a decision to be reviewed and taken back. How can Rs. 20,000 Air Ticket be called Economy?? . Ironically on the name of giving protection to COMMON MAN, Govt gets into a trap of being anti common people. In the name of benefit to Micro borrowers, RBI prescribes an interest rate cap of 26%. None of the MFIs, making billions of profits has average cost of LENDING less than 20-24%. SIDBI, the exchequer lender of MSME, caps interest at PLR+4% (not Base Rate) which is effectively ~20% for SME (SIDBI Guarantee, Bank and broker charges extra). Average cost of borrowing in last five years (by NBFCs not Banks) for Small Road Transport Operator (SRTO) has been in the range of 20-25%. IMPORTANT to note that all these loans (many others) fall in the category of Priority Sector Loan (PSL) which is being refinced by Banks to NBFC/ MFI at an average rate of 8-10%. Cost of LAZY Banking is borne by the tiny borrowers who do not have an option other than to go to the Local Money Lenders (Shudkhors). I simply want to ask and request our respected Finance Minister Shri Arun Jaitley Ji, that which normal business generates ROI (Return on Investment) more than 20%. And If that is the case, then how do you expect after paying an interest of more than 20-25% to NBFC/ MFIs, one small entrepreneur/ individual can generate positive cash flows for his/ her business. . We want Credit Growth or an Inclusive Credit Growth is a question we need to think sincerely?? A letter written to Honarable Finance Minister... . CC to: Ministry of Finance, Government of India, Narendra Modi, PMO India .
Posted on: Wed, 24 Dec 2014 17:21:13 +0000
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