RBI urges banks to provide advisory services to SMEs

BANGALORE, INDIA:

Banks should strengthen their relationship with the small and medium enterprise (SME) sector by providing the small firms advisory services on a range of financial areas, said a top official from the Reserve Bank of India.

Speaking at an industry seminar organised by the SME Chamber of India in Mumbai over the weekend, RBI deputy governor KC Chakrabarty said that banks, which have long-term association with such SMEs as lending partners, can further this relationship by providing consultancy on finance, cash-flow management, taxation and other related things for a fee.

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A desk should be available centrally that will help SMEs and can handle multiple SMEs, he added.

“An SME-promoter knows the product, but he doesn’t know finance,” he is quoted as saying by a news agency report.

“I think this is a product innovation, which needs to be done by banks and it needs to be done across the globe,” he added.

He also came down hard on the high interest rates charged by banks in lending to SMEs, asking if they can be compared with rates charged to corporates. As a matter of proper governance, Chakrabarty said, "I will be happy if banks disclose this in the balance sheet."

Source : www.dare.co.in