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Aug 02, 2011, 04.08 PM IST | Source: PTI

MSME credit task force asks RBI to put pressure on lenders

Expressing concern over state-run banks, including SBI, not fulfilling their MSME credit disbursement targets, a task force under the Prime Minister's Office has asked the RBI to mount pressure on lenders to provide sufficient funds for growth of the sector.

MSME credit task force asks RBI to put pressure on lenders

Expressing concern over state-run banks, including SBI , not fulfilling their MSME credit disbursement targets, a task force under the Prime Minister's Office has asked the RBI to mount pressure on lenders to provide sufficient funds for growth of the sector.

At a meeting presided over by T K A Nair, the Principal Secretary to the Prime Minister, it was decided that the "pressure must continue" on SBI and its associates like State Bank of Bikaner and Jaipur and other PSU banks to fulfill their targets, a highly placed source told PTI.

As per the targets given to the public sector banks, they have to achieve 20% growth in credit disbursement to micro, small and medium enterprises (MSMEs), of which half must go to the micro units.

The country's largest lender, SBI, did not achieve its target for ramping up disbursements to micro enterprises out of the total amount allocated to the MSME sector, according to the source.

"Against a target for 50% growth in credit disbursement, the bank only registered 32% in terms of credit disbursement to the micro enterprises, out of the total amount to the given to the MSME sector," he said.

"We will continue to put pressure.... The RBI has been asked to go into it," the source said.

MSME Secretary Uday Kumar Verma, Planning Commission Member Arun Maira and senior officials of the departments of expenditure and financial services attended the meeting.

A senior representative of the Reserve Bank of India was also present at the meeting of the PM-appointed task force, which was convened to review the status of implementation of its recommendations.

Besides SBI and its associates -- State Bank of Patiala and State Bank of Travancore -- banks like IDBI and Union Bank of India, Vijaya Bank, Allahabad Bank and the Central Bank of India fell short of their MSME credit disbursement targets.

The task force, which was appointed during the 2009 global financial crisis, had given several recommendations for ensuring credit availability to this vital sector.

The MSME sector provides employment to 60 million people through 26 million enterprises. It contributes 40% to India's exports and 45% to total manufacturing output.

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