Banks ask to up lending to micro industrial sector

As the overall credit off take started losing steam on the back of rising interest rates, the Reserve Bank of India (RBI) on Tuesday asked banks to step up their lending to the micro industrial sector.

"We have been asked to increase our lending to micro industries and meet the mandated 55% of advances to the MSME sector to them during this fiscal," Dena Bank chairman and managing director PL Rawal told reporters.

Rawal met the media after a standing advisory committee meeting on MSMEs at RBI. Other bankers who met the RBI included the chairmen of SBI, Union Bank and PNB among others.

But they refused to talk to the waiting reporters.

Last year, banks were asked to lend upto 50% of their overall exposure to the MSME sector to the micro industries. This year banks have to increase it to 55% and up to 60% in FY13.

Rawal also said in the rising interest rate scenario banks have expressed their apprehensions about the possibility of slippages since the advances to the micro industries are collateral free loan. But he added that the RBI stuck to its stance.