M Nagaraju, Secretary, Department of Financial Services
| Photo Credit:
ANI
Department of Financial Services Secretary Nagaraju M on Friday exhorted banks to give loans to small businesses and the self-employed at cheaper interest rates as they are backed by credit guarantees from government institutions
He noted that banks chase corporates, offering loans at 7-8 per cent. But the loan offers are declined.
“We keep asking whether they (corporates) require any money. They are declining. But those who want, we lend at maybe around 7 per cent,” Nagaraju said in his speech at IBA’s 78th AGM.
“Let’s say, a maid-servant, a rickshaw-puller, driver…they are the people who require loans. And we lend at between 9 and 11 per cent….And NBFCs, they lend to them at a little more than 20 per cent.
“Can we do something? For small business loans, we have institutions that guarantee (the loans). So, can we reduce the borrowing cost for these borrowers?” he said.
Nagaraju observed that India’s financial system is still largely bank dominated. But, bank credit-to-GDP ratio stands at just 57 per cent. This is significantly lower than economies such as China, which has 199 per cent credit-to-GDP ratio; the US at 147 per cent and Japan at 153 per cent.
“Clearly, there is a vast gap that we must bridge as we look ahead to Viksit Bharat 2047, as we aim for a nominal GDP to grow to $30 trillion from $3.7 trillion now. We envisage a per capita income of $18,000-20,000 compared to $2,800….To meet aspirations of 2047, total credit to private non-financial sector must be expanded to at least 130 per cent,” he said.
Published on February 20, 2026
