GOVERNMENT OF INDIA
MINISTRY OF FINANCE
UNSTARREDQUESTION NO: 2888
ANSWERED ON: 30.03.2012
LOANS TO MSWIES QUESTION
(a) the details of the targets set and achievements made with respect to the loans provided by the Scheduled Commercial Banks (SCBs) to Micro, Small and Medium Enterprises (MSMEs) during each of the last three years and the current year, bank-wise alongwith the action taken against the banks who have failed to achieve their target;
(b) whether the Government proposes to relax the norms regarding lending to the MSMEs keeping in view their financial crisis and economic recession;
(c) if so, the details thereof alongwith the mechanism in place to monitor such (endings; and
(d) the steps takenbeing taken by the Government to ensure adequate lending to MSMEs including sick small industries?
(a)to(d): In terms of the recommendations of the Prime Ministers Task Force on Micro, Small and Medium Enterprises (MSMEs), Reserve Bank of India (RBI) has advised all banks as under;
i. The allocation of 60 of the MSE advances to the micro enterprises is to be achieved in stages vi. 50 in the year 2010-11, 55 in the year 2011-12 and 60 in the year 2012-13 and
ii. Achieve a 20 per cent year-on-year growth in credit to micro and small enterprises to ensure enhanced credit flow;
iii. Achieve a 10 annual growth in number of micro enterprise accounts. The details of bank wise achievements of the above targets as on last reporting Friday of March are as
(Amount Rs. in crore) Year Publc Prvate oregn Bans ll Scheduled Sector Bans Sector Bans ommercal bans
ast mt. s mt. s mt s mt s rday o
arch 2009 191408.32 46656.33 18063.42 256128.07
arch 2010 276318.97 64824.72 21147.05 362290.74
arch 2011 478575.73 136423.94 21597.33 636597
Retail trade included in service sector, included Medium Enterprises Sector. MSE credit is reckoned for Priority Sector Lending. Any shortfall in achieving the Priority Sector targets is to be deposited by banks to the RIDF SIDBINHB. SIDBI in turn utilises the fund thus deposited for refinancing MSME advances.
To increase credit flow to the MSE Sector various measures have been taken such as issuing prudential guidelines on restructuring of advances, to introduce Base Rate System, Formulation of Banking Code for MSE Customers, Focus on Clusters, One Time Settlement scheme for recovery of non-performing loans for the MSE sector etc. have been taken by RBI so that flow of credit to the MSE Sector could be increased.