Puducherry CM urges banks to adopt liberal approach for sanctioning loans to MSMEs

New Delhi, Sept 24 (KNN) Puducherry Chief Minister V.Narayanasamy has urged the banks to adopt a more liberal approach to sanctioning loans for the MSME and farm sectors, which generally maintain a credible repayment record.

He called for a change in the attitude of banks focusing on supposedly high-value clients at the expense of small traders and farmers.

Addressing a meeting of the State level Bankers Committee hosted by Indian Bank, Narayanasamy said that many banks were under huge burden of non-performing assets because of the practice of focusing more on high-value clientele and industry majors.

Turning to the Micro, Small and Medium Enterprises (MSMEs), the Chief Minister felt that this sector had for far too long been neglected by financial institutions. Especially post-GST, many MSME units were struggling to compete, a fact he had highlighted in a recent letter to the Finance Minister, he said.

Pointing out that apart from their employment potential, MSMEs accounted for 25% of the country’s aggregate exports, Narayanasamy appealed to banks to adopt special focus on this sector.

Further, he pointed out that even the government of India had enunciated a policy of encouraging, through various schemes, small businesses and farmers besides self-employment of women and youth.

Banking support for farmers was all the more crucial in a resource-strapped place such as Puducherry, where farmers had to devise their own irrigating sources from groundwater and procure agricultural inputs including fertilizers, said Chief Minister.

 While the government was providing various subsidies for procuring seeds and fertilizers besides market intervention mechanisms, the banks need to adopt matching supportive measures, he added.