Chidambaram asks banks to fund MSMEs adequately
Updated: Oct 22, 2013 04:14:22pm
New Delhi, Oct 22 (KNN) Finance Minister P Chidambaram today asked public sector banks to adequately meet credit requirements of the micro, small and medium enterprises (MSMEs).
There has been widespread demand from the industry, from the government and the Reserve Bank of India that the MSME sector should be given a special dispensation.
The RBI is set to review its credit policy on October-29 and the demand for easy loan to the MSMEs was made at a meeting with the RBI in Mumbai yesterday between the central bank and different industry associations.
Taking a review meeting of public sector banks, the Finance Minister said that he has asked banks to give special attention to the recovery of loans which have been written off.
Asserting that the economic situation is not as bad as being painted, Chidambaram said that the banking sector will focus on financial inclusion in the current financial year and reach the unbanked areas by opening 10,000 new branches. They would also set up 34,668 on site ATMs during the current financial year.
He said that credit growth has been satisfactory in the first quarter although the non-performing assets have increased.
In the wake of pressure on the current account deficit, Chidambaram said the ban on import of gold coins and medallions will continue.
Chidambaram’s comments come in the wake of dismal growth seen in credit deployment to micro and small units. Reflecting the economic slowdown, the credit deployment by banks into micro and small units for the current financial year has grown by a mere 2.8 per cent.
The credit growth to the sector in the previous fiscal was 20 per cent. With the current trend, credit growth to this sector is unlikely to catch up by year end and reach the level of the previous year.
But in the case of medium enterprises, things are slightly better. So far, credit deployment to this category has grown by eight per cent, when according to RBI data, it was 2.3 per cent in the previous year.
Large enterprises on the other hand, too have shown a dismal growth of 4.5 per cent so far, when the growth for the whole year was 18.2 per cent in 2012-13.
Across all three categories, the micro and small units seem to be reverse performing.
As far as other sectors of the industry are concerned, trade and wholesale trade too have performed poorly. While growth in credit to trade was a mere 3.1 per cent so far as against the year on year figure 23.5 per cent in 2012-13; wholesale trade stands at (-) 0.5 per cent so far compared to 16.2 per cent in the last fiscal. (KNN/PC)
There has been widespread demand from the industry, from the government and the Reserve Bank of India that the MSME sector should be given a special dispensation.
The RBI is set to review its credit policy on October-29 and the demand for easy loan to the MSMEs was made at a meeting with the RBI in Mumbai yesterday between the central bank and different industry associations.
Taking a review meeting of public sector banks, the Finance Minister said that he has asked banks to give special attention to the recovery of loans which have been written off.
Asserting that the economic situation is not as bad as being painted, Chidambaram said that the banking sector will focus on financial inclusion in the current financial year and reach the unbanked areas by opening 10,000 new branches. They would also set up 34,668 on site ATMs during the current financial year.
He said that credit growth has been satisfactory in the first quarter although the non-performing assets have increased.
In the wake of pressure on the current account deficit, Chidambaram said the ban on import of gold coins and medallions will continue.
Chidambaram’s comments come in the wake of dismal growth seen in credit deployment to micro and small units. Reflecting the economic slowdown, the credit deployment by banks into micro and small units for the current financial year has grown by a mere 2.8 per cent.
The credit growth to the sector in the previous fiscal was 20 per cent. With the current trend, credit growth to this sector is unlikely to catch up by year end and reach the level of the previous year.
But in the case of medium enterprises, things are slightly better. So far, credit deployment to this category has grown by eight per cent, when according to RBI data, it was 2.3 per cent in the previous year.
Large enterprises on the other hand, too have shown a dismal growth of 4.5 per cent so far, when the growth for the whole year was 18.2 per cent in 2012-13.
Across all three categories, the micro and small units seem to be reverse performing.
As far as other sectors of the industry are concerned, trade and wholesale trade too have performed poorly. While growth in credit to trade was a mere 3.1 per cent so far as against the year on year figure 23.5 per cent in 2012-13; wholesale trade stands at (-) 0.5 per cent so far compared to 16.2 per cent in the last fiscal. (KNN/PC)
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