Microfinance lending rates for the poorest borrowers are rising even though a government credit guarantee scheme was meant to reduce costs. MFIs say their own borrowing is getting more expensive, particularly the higher prices they pay banks for funds. As a result, the increased financing burden is getting passed on to end borrowers.
Indian exporters are urging the government to remove the cap on interest subvention, saying the current support is too low to withstand rising global trade uncertainty. The Federation of Indian Export Organisations wants the scheme revised to offer stronger relief, particularly for firms hit by higher borrowing costs and unstable export demand.
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