Parliamentary panel suggests easing of repayment norms for MSMEs

NEW DELHI: A Parliamentary panel has suggested easing repayment norms for the MSME sector, including an upper cap on interest rates, and asked the MSME Ministry to take up the matter with the Finance Ministry and the RBI.

"Despite supposed deregulation, repayment norms remain almost identical in all the banks. The Ministry of MSME must take up the issue with the Department of Financial Services and the RBI to relax NPA and other repayment norms to ease the pressure on MSMEs," the panel on review of MSME Development Act said in its report.

Observing that while interest rates have been deregulated to encourage competition among banks, they are almost identical, the Committee said.

While RBI prescribes base rates, it may also prescribe a cap on interest rate for MSMEs, it added.

The Committee is chaired by Member of Parliament in Rajya Sabha K C Tyagi.