Credit policy would not benefit SMEs: chamber

COIMBATORE: RBI''s decision to reduce bank rate and cash reserve ratio would not benefit the small and medium enterprise sector and trade, Indian Chamber of Commerce and Industry said on Thursday.
The credit policy announcement had come at a period of considerable uncertainties regarding the economic scenario for the year 2003-2004, Chamber president, A V Varadharajan said in a statement.
"Failure of rains in 2002-03 and the prospect for a deficit rainfall in 2003-04, a large deficit in the Union budget, stoppage of economic reforms, the populist pressures on the eve of elections in some crucial states have all joined to cast a gloom in the economic horizon", he said.
The only bright spot was the lower rates of interest, sustained by large flow of funds from abroad, he said.
The benefits of higher liquidity and lower interest had gone to the Government and the banks, reducing their cost of borrowed funds, Varadharajan said, adding to certain extent, large corporates had also benefitted.
However, small and medium sized enterprises still had to pay high rate of interest, going upto 16 per cent, he added.