SME Times News Bureau | 12 Mar, 2020
RBI has deregulated the interest rate on advances
and these interest rates are determined by banks with the approval of their
respective Board of Directors subject to extant guidelines of RBI, said an
official release on Thursday.
Loans to Micro, Small and Medium Enterprises
(MSMEs) are provided as per the interest rate structure of the bank, it added.
The interest rate is finalized based on various
factors which inter-alia include, cost of funds to the institution, credit
rating of the unit, tenure of loan, purpose of loan etc.
The rating of MSEs under erstwhile Performance
& Credit Rating Scheme of the Ministry of Micro,
Small and Medium Enterprises to provide a third party opinion on their
capabilities and creditworthiness so as to create awareness amongst them about
the strengths and weakness of their existing operations has been discontinued
effective from December, 2018.
Further, under the Interest Subventions Scheme
for Incremental Credit to MSMEs 2018 offers 2% interest subvention on fresh or
incremental loans upto Rs.1 crore to MSMEs.
This
information was given by Nitin Gadkari, Union Minister for Micro, Small and
Medium Enterprises in written reply to a question in Lok Sabha.