Raising of interest rates by the Reserve Bank of India (RBI) can be a dampener on the investment climate in India, President of the Associated Chambers of Commerce and Industry of India (ASSOCHAM) Dilip Modi said.
He was reacting to the RBIs decision to increase headline rates by 25 bps in the Mid-Quarter Monetary Policy.
Speaking to presspersons after releasing their report Karnataka: Next Growth Leader in the Making during the inauguration of the national conclave on microfinancing, Modi said that hiking rates could also lead to reduced investment, which on contrary is an urgent requirement. This would also lead to lower capital formation, he felt.
Earlier in the day, he stressed the need for it, which could in turn benefit micro financing institutions. Talking on the theme of the conclave Strangulate or regulate he said that the micro financing sector is close to `30,000 crore in outstanding loans to 30 million borrowers.
Micro finance in Karnataka is [worth] about `2,000 crore, he said and added, Karnataka has set a target of achieving financial inclusion on all villages with a population of 2,000 or more by 2012.
Adding to this, Minister for Rural Development Jagadish Shettar, said that the growth rate of microfinancing in the state had gone up by 64 per cent, as against the national average of 42 per cent in 2008-09.
The total number of clients of micro financing has reached 3.2 million apart from 3 million clients from 2,32,000 Self Help Groups (SHG), he noted.
Sharing statistics, Shettar said that they have formed 7,691 SHGs out of which 88,794 Swarojgars (beneficiaries) have been doled out `72.4 crore and the department has also facilitated to get a loan of `188.3 crore from various banks.
Further, he said, In 2009- 10, 7,018 SHGs have been formed, of which, 91,366 Swarojgars received `78 crore, and `196 crore was raised from various banks. He added that in the last fiscal, 7,388 SHGs were formed, out of which 1,04,527 Swarojgars had been funded `82 crore and raised `231 crore from different banks.
Vijaya Bank Chairman and Managing Director (CMD) Upendra Kamat said that nearly 120 million households were not part of financial inclusion.
Further, he said that financial inclusion should not be limited to giving subsidies alone. He said it should translate into providing them with accessible and affordable credit.