New Delhi, Oct 5 (KNN) Union Finance Minister Nirmala Sitharaman on Tuesday told SIDBI that there is a requirement to increase its share in direct finance in credit to MSMEs BY 20% to meet growing need of capital of such enterprises.

She was in Coimbatore earlier this week for the inaugural of a new branch of Small Industries Development Bank of India (SIDBI).

According to a release by SIDBI, the FM mentioned that while SIDBI was predominantly doing indirect finance as mandated and it reached out to the MSMEs through Banks, NBFCs, MFI etc., it has now felt that the financial needs of MSMEs are dynamic and need to be met in a timely and cost-effective manner. 

“With this background, SIDBI started direct finance which is around 10% of total credit to MSMEs. However, the 10 per cent of the credit has its relevance and needs to be increased to 20% and further,” she said. 

The minister further informed that SIDBI is currently fully digitized and caters to the varied needs of the MSME with its innovative products.

She also noted that MSMEs are a vital part of the Indian economy and have made significant contributions to the country’s socio-economic growth. 

Since MSMEs make a crucial contribution to India’s GDP, are the second-largest employment provider, and have a significant contribution to the overall exports of the country, there is a need for providing timely and adequate credit to MSMEs by banks and financial institutions, she added.  (KNN Bureau)