'RBI should give priority to SMEs & agri'

NEW DELHI Industry body Assocham has asked the Reserve Bank to give priority treatment to SMEs and the agri-business in its forthcoming Review of Monetary and Credit Policy on July 24.

It also urged the RBI to adopt a measured approach towards normalisation of interest rates.

In a representation submitted to the RBI, Assocham president Anil K Agarwal has requested the apex bank to evolve special financial schemes to provide affordable and timely credit to sectors such as agriculture and agri-business, village electricity scheme, SMEs and tiny industries, micro & self-help groups, rural housing and infrastructure development.

Agarwal said that RBI in its Credit Policy should also lay down regulatory framework for lending to farmers and rural dwellers by commercial banks for which the lending norms should be stringent enough to keep a check on misuse of subsidized financing.

Resource flow including long term funding to productive and greenfield projects should also be enhanced, he added.

In order to achieve macro-economic stability, there is a need to adopt a measured approach towards modernisation of interest rates.

"High credit off-take, trade deficit, inflationary pressures, interest rate hikes by the US Fed & European Central Bank, all these suggest that the RBI would maintain a tightening bias," he said.

While high commodity prices, particularly crude oil have created supply side inflationary pressures, a judicious mix of fiscal and monetary measures, has also been able to contain inflationary expectations to a large extent, the chamber said.