Free industry from financial roadblocks: GCCI

Ahead of the Reserve Bank of India (RBI) announcing its annual monetary credit policy, the Gujarat Chamber of Commerce and Industry (GCCI) has suggested that financial roadblocks for the industry must be cleared and banks must be asked to gear up to lend more to small businesses.

Chinubhai Shah, president, GCCI said in a statement on Friday, "The annual monetary policy of the apex bank should be directed towards containing inflation and freeing the industry from financial roadblocks."

He said that the economy is performing well an it is expected that investment and technology inflow would continue into the infrastructure and core industries sectors, including IT and food processing.

Stressing that exporters bring in substantial foreign exchange, Shah said that is imperative that the Reserve Bank of India should take a policy decision to extend export credit at internationally competitive rates.

"The feeling is that only blue chip corporates have benefited from lower lending rates, while the small and medium sector is rendered uncompetitive due to higher lending rates in the liberalised economy," Shah said.

He added that given the potential of small and medium industries, banks should be asked to lend more to small businesses. Shah also mentioned the issue of transaction tax, stating that this tax is extremely high in India as compared to other countries.

"RBI should advise banks to reduce expenditure through rationalisation and training of staff and upgrade technology to reduce intermediate costs," he said.

Shah added that transfer of funds to different accounts or centres, inter banks transfers and the like should be made swifter and at lower costs.

"The functioning of banks should be effectively monitored by the RBI and IBA so as to prevent arbitrary hike in service charges," the GCCI president said.

Shah said that banks should be advised and encouraged to increase flow of commercial credit particularly to the retail trade and distribution, marketing, housing sector, agro based industries and food processing areas.

Shah also highlighted the need to evolve an effective mechanism by banks at the state level to ensure timely and adequate financial support to sick industries.