Government decides to increase the share of Microenterprises in Micro and Small Enterprise (MSE) lending needs too 60% in a phased manner

Increasing Credit Flow to MSE Sector

Loans are sanctioned by the Scheduled Commercial Banks (SCBs) as per financial viability, feasibility of the project and keeping in view their Bank approved policies. However, the Government has decided that the share of Microenterprises in Micro and Small Enterprise (MSE) lending needs to be increased to 60% in a phased manner viz. 50% in the year 2010-11, 55% in the year 2011-12 and 60% in the year 2012-13. It would be mandatory for the Public Sector Banks to achieve this target. Further, banks have been advised by Reserve Bank of India (RBI) to extend liberal moratorium on their term loans and working capital to MSE entrepreneurs by including interest during first 6-12 months of operation as part of the long term funding of the projects.

            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.

            Credit flow to the MSE sector during the last three years is as below:

                                                         (Amount Rs. In crore)

                                     # Retail trade included in service sector

            This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question raised in Lok Sabha.