New Delhi, Feb 5 (KNN) The RBI Monetary Policy announced on 5th Jan 2021 has allowed Scheduled commercial banks to deduct credit disbursed to new MSME borrowers from their ‘Net Demand & Time Liability’ calculation of CRR. 

Instead of reducing CRR where banks could have used the funds anywhere and transmission could not be ensured, RBI has incentivised Banks to lend to micro enterprises – the limit being Rs. 25 lac per borrower, from CRR reserves.

The Federation of  Indian Micro and Small Medium Enterprises (FISME) has welcomed the decision.

 “It’s a smart move by RBI as banks would be greatly encouraged to use idle CRR funds to earn more by lending to micro enterprises. However, we wish if RBI were bolder and allowed them to extend loans up Rs. 1 cr per borrower instead of Rs. 25 lac” says Anil Bhardwaj, Secretary general of FISME.   

The 3 lac crore ‘Emergency Credit Line Guarantee Scheme’, benefitted only those MSMEs who had loans running on 29th Feb  2020 and 20% of outstanding loan was allowed to be given as loan without collateral.

FISME is of opinion that still a very large number of MSME entrepreneurs have been left out without support and by increasing the limit to Rs. 1 crore could have benefitted them.

The Monetary Policy has kept the policy rates unchanged. The repo rate is maintained at 4 percent and reverse repo rate at 3.35 percent

The RBI has pegged real Gross Domestic Product (GDP) growth at 10.5 percent in 2021-22.