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MSME Ministry Convenes Meeting With Public Sector Banks

Raj Narayan's picture
Tags: PSU Banks
MSME Ministry Convenes Meeting With Public Sector Banks
MSMEs are struggling with cash flow issues due to lengthy payment cycles as well as non-availability of timely bank credit

New Delhi, December 09: The Ministry of Micro, Small and Medium Enterprises (MSME) will be meeting heads of various banks in order to persuade them to improve the flow of credit to the small and medium industries. 

The MSME Minister of State KH Muniyappa said the meeting called with the chairmen and managing directors fo various public sector banks, including the country's largest bank the SBI, will try to evaluate the problems faced by them in financing smaller units. 

The minister said the purpose of the meeting was to sort out the issues at the earliest in order to ensure that access to credit becomes easier for the MSME sector. It may be recalled that the government had recommended a 20 per cent annual growth in credit to the micro and small enterprises. 

He was of teh view that though the RBI had set guidelines to improve credit flow to MSMEs, the banks should be more liberal in providing loans as most small and medium enterprises suffer from cash flow issues due to non-availability of credit and lengthy payment cycles in the business. 

The minister expressed concern at the declining share of MSMEs in the country's overall exports which had dropped to 36 percent from a level of 40 percent a year ago. However, he was quick to add that the slump was a result of global recession. 

The government has set itself a target of ensuring MSME share of exports at 50 per cent and to achieve this lofty goal, the banks and the administration need to support the sector by making available funds at the opportune moment, he added.