In light of this finding, the Bank decided to introduce a more powerful commitment that it will continue expanding the monetary base until the year-on-year rate of increase in the observed CPI exceeds 2 percent and stays above that level in a stable manner.
Banks’ credit to SMEs has declined over the last 4 years from Rs 437 billion in 2007 to Rs 248 billion in June, 2012. Although, this decline can be partly attributed to adverse economic conditions during the period and growing NPLs, a more risk-averse posture of banks remains a major factor responsible for their low exposure to SMEs.