Banks Urged to Cut Loan Costs for Small Businesses

M Nagaraju, Secretary of the Department of Financial Services, urged banks to lower loan interest rates for small businesses to boost the economy. He emphasized the need for increased lending, digital technology adoption, and financial inclusion. Banks posted healthy growth with strong asset quality and profitability.

The Department of Financial Services Secretary, M Nagaraju, has called upon banks to reduce interest rates on loans offered to small businesses to help boost the economy. Speaking at an Indian Banks Association event, Nagaraju highlighted the disparity between the interest rates charged to large corporate entities and smaller firms, urging banks to address this gap.

The DFS Secretary challenged banks to cut borrowing costs for small businesses without incurring portfolio losses. CS Setty, who chairs the Indian Banks Association and State Bank of India, emphasized that digital technologies could help reduce lending costs, thus benefiting smaller businesses seeking loans outside government schemes.

Nagaraju mentioned that corporate customers are declining loan offers, suggesting banks focus on smaller business loans. Additionally, he noted the progress in banks' profitability and health, while urging increased lending to achieve the ambitious credit to GDP ratio goal as part of India's growth target for 2047.