State Bank of India (SBI) is preparing to keep an eye on the end use of funds raised by small traders or businesses. State Bank of India Chairman CS Setty on Friday advocated for dedicated institutions. Advocated the creation of a market infrastructure institute to monitor the end-use of funds borrowed or raised as equity by small businesses, PTI reported. Concerns have increased over the use of funds.
Need for a viable mechanism
According to the news, SBI Chairman said that we will need a viable mechanism to monitor the actual utilization of these funds. This is to ensure that funds are used for the purposes for which they have been raised. Through the establishment of a separate market infrastructure institution with the power to monitor the utilization of funds raised through borrowed funds or equity. Setty said the creation of such a platform would facilitate lenders as well as investors and make pricing more competitive.
Reserve Bank of India is maintaining monitoring pressure
Let us tell you, the Reserve Bank of India is putting pressure on banks to monitor end use funds, especially in the case of borrowing by small businesses. In March last year, the central bank had asked lenders issuing business credit cards to monitor the end use of funds. There have also been reports that some unsecured borrowings are being used to make bets in risky areas of the derivatives markets.
8-9 percent GDP growth needed by 2036
Achieving the goal of a developed India by 2047 will require GDP growth of 8-9 per cent by 2036, Setti said, giving an estimate of the capital required over the next decade. He said that to achieve the development agenda, the domestic savings rate will have to be increased by at least 3.50 percentage points from the current level to 33.5 percent. He said the role of capital markets will also be important and we will need depth in the country’s equity markets.
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