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Credit Flow to MSME Sector Doubles: RBI

October 14, 2009 | COMMENTS ( 0 )

Credit Flow to MSME Sector Doubles: RBI

The flow of credit to micro, small and medium enterprises (MSMEs) has increased by more than double according to KC Chakrabarty, deputy governor, RBI. The banks credited Rs 2.57 lakh crore to the MSMEs in the financial year which ended in March 2009.


The governor also said that the credited amount had increased from Rs 1.27 lakh crore to Rs 2.57 lakh crore in two years time to the MSME sector at a conference on finance availability for MSMEs by industry body CII.

Asking entrepreneurs to come up with viable projects that can convince bank branch managers of repayment of the loan, he said there is no shortage of funds and industrialists must understand the difference between money and credit.

 

Chakrabarty suggested to banks that they should not be as aggressive as venture capitalists and must do their own assessment before advancing loans without depending on the credit rating agencies.

 

He added the country needs a robust MSME sector to grow at a rate of 10 per cent for the next 20 years. There are 30 million MSMEs in the country. The SME sector has showed an average growth of 18 per cent in the last five years. About 98 per cent of the manufacturing units are in the SME sector.

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