With RBI's decision to reduce repo rate by 25 basis points from 6 per cent to 5.75 per cent, Tirupur Exporters Association (TEA) Thursday appealed to all banks to pass on the cut in the rate to borrowing units in the knitwear garments export sector.
The repo rate cut is desperately required for the knitwear garment exporting units, particularly MSME exporting units which have been suffering further to macroeconomic changes, the TEA said.
Hailing the reduction, TEA president Raja M Shanmugham said in a statement that the monetary policy committee decision to change the monetary policy stance from neutral to accommodative gives confidence that there would not be any interest hike in the near future.
The monetary policy statement pointed out that transmission of the cumulative reduction of 0.5 per cent in the policy repo rate in February and April 2019 was 0.21 per cent to the weighted average lending rate (WALR) on fresh rupee loans, he said in the statement.
The policy also mentioned that the WALR on outstanding rupee loans increased by 0.04 per cent as the past loans continue to be priced at high rates, the statement said.
Considering the industries requirements, Raja Shanugham appealed to all the banks to come forward and pass on the benefit to the borrowing units.
The reduction of interest rate would pave way for growth of investment and exports, he added.
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