RBI Rate Hike: Capex To Go Down, Increase Cost of Doing Business


The recent rate hike by the Reserve Bank of India will increase the cost of doing business and have direct impact on capital expenditure as indicated by Confederation of Indian Industries.

RBI had increased the repo rate (the rate at which it lends to the banks) by 0.25 per cent beginning of this month to check inflation. This would directly increase the lending rate by the banks at a time when availability of credit as a cause of concern for smaller businesses. As on date, 11 banks are under prompt corrective action (PCA) framework, which puts restrictions on normal lending activities, reduces their ability to support the need of the MSME sector and large industry.


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