Leveraging CAR
Banking secy Nagaraju urges banks to lower cost of borrowing for small businesses
This story was originally published at 22:08 IST on 20 February 2026
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NEW DELHI – Department of Financial Services Secretary M. Nagaraju urged public sector banks to lower interest rates on small-ticket business loans that are not meant for consumption purposes. "I want to give a challenge to banks...can we reduce borrowing costs for small businesses," Nagaraju said Friday at the annual general meeting of the Indian Banks' Association in Mumbai.
"For the people who are not borrowing for retail or consumption, for small business loans that are guaranteed by the government can we reduce the borrowing cost? Don't make losses on this, don't make profit also," he urged the bankers attending the event.
"The way we (PSU banks) have outpaced the private sector in the micro, small and medium enterprise lending...I think should keep lending. MSME is the core, and we have to keep that in mind," he said.
Nagaraju nudged banks to lend more by leveraging their robust capital adequacy ratio. Currently, banks lend to corporate entities at rates as low as 7%, while the smaller businesses are charged upwards of 9-11%, he said.
State Bank of India Chairman C.S. Setty said banks are lending at competitive rates in the credit guarantee sectors but will need to look at ways of lowering costs for loans that are not covered under the government schemes. One of the ways for banks to lower rates will be to adopt more digital technologies, he said. End
Reported by Sagar Sen
Edited by Ashish Shirke
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