New Delhi, Dec 4 (KNN) Decision taken by Uttar Pradesh Government to tie-up with microfinance institutions (MFIs) would help micro, small and medium enterprises (MSMEs) grow, said Sunil Vaish, President of Indian Industries Association.

UP government has taken this step to ease the flow of funds to the beleaguered MSMEs.

The MSME sector is the backbone of UP's industrial landscape and is home to almost five million MSMEs.

Welcoming the step, speaking with KNN India Vaish said, “It is important that banks and MFIs should also look positively on the step taken.”

He said, “Banks and other MFIs are very rigid in providing credits to MSMEs.”

He added, “We will have to see how banks and MFIs look upon this step taken by the UP government.”

“Banks after the directions of RBI have become very sensitive in providing credits to MSMEs,” he said adding that “If we see the data of lending by the banks, then the flow of credit is very slow.”

He said, “Issue of lending is a very critical issue. On which basis will UP government tie-up with the institutions, and what will be the exact criteria for it should also be mentioned by them."

“It should also be made clear that on which basis they will provide credits to MSMEs, as the balance sheet of MSMEs are falling from past 2 years,” he mentioned.

He said that if MSMEs will get facilities only then they will grow.

Vaish said that we demanded from government to provide credits for MSMEs, and now as it is happening we welcome it and hope to be beneficial.

The Yogi Adityanath government is planning to integrate the MFI channel with its flagship One District One Product (ODOP) scheme launched earlier this year.