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SIDBI should earmark its 50 per cent disbursals for MSEs: Parliamentary panel

Tags: SIDBI, Standing Committee on Finance, Parliamentary panel, credit, MSME, disbursals

March 06, 2013 | COMMENTS ( 0 )

SIDBI should earmark its 50 per cent disbursals for MSEs: Parliamentary panel

Apprehending that large units could corner more credit from SIDBI, a Parliamentary panel on Tuesday suggested the financial institution should compulsorily earmark at least 50 per cent of its disbursals for lending to micro and small enterprises (MSEs).

The Standing Committee on Finance in its report tabled in parliament on the Small Industries Development Bank of India (Amendment) Bill, 2012 has noted that the proposed changes to widen the scope of SIDBI by bringing in more activities or vocations will bring in even larger concerns and enterprises within its credit ambit.

The report said the credit policies and practices of SIDBI should be well delineated so that the micro/tiny enterprises, which do not have adequate access to credit and related services, do not get "overshadowed" by the access enjoyed by bigger units.

It further stated, "The Committee would, therefore, recommend that preferential treatment should be accorded by SIDBI to MSEs by compulsorily earmarking for them not less than 50 per cent of the total disbursals."

SIDBI could meanwhile keep on financing such small and medium enterprises, say up to 3-5 years, until their transition into a larger concern and consequently moving towards regular financing options, according to report.

The Committee, it said, believe that micro-credit, being a neglected area, should be accorded priority and thus desire that SIDBI "should evolve a pro-active and coherent policy" for the development of micro enterprises.

The Bill which introduced in Lok Sabha in May 2012, when enacted will effect consequential changes in SIDBI Act to bring in the concept of micro, small and medium enterprises, in addition to the list of activities already allowed.

The legislation would enable SIDBI to finance, promote and develop all industrial undertakings in the MSME sector. It also addresses certain gaps in the matter of recovery of loans and advances to the MSME against third party assets.

Proposed amendments would help to address the problems faced by borrowers graduating from micro-finance dispensation to larger loan sizes and promotion of self-employed ventures capable of generating employment, among others objectives, the report added.

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