Mumbai, Dec 23: The Reserve Bank is working on
guidelines to up the limit of collateral free loans to small
and medium enterprises to Rs 25-lakh from Rs 5-lakh at
present, a top bank official said.
"As of now, banks cannot insist on any colleteral from
SMEs for loans upto Rs 5-lakh. This limit may go up to
Rs 25-lakh based on good track record and financial position
of units," Reserve Bank Chief General Manager, Amarendra
Sahoo, told reporters here on the sidelines of an SME
conference today.
SMEs account for 40 per cent of the industrial output and
34 per cent of exports of the country.
Recently, the credit guarantee fund trust for micro and
small enterprises (CGTMSE) had launched a scheme as per which
its member banks can disburse collateral-free loans upto Rs
1-crore to those SMEs which mainatain a good track record.
The member banks of CGTMSE include State Bank of India,
Punjab National Bank, Bank of India, United Bank of India,
Small Industries Development Bank of India and Union Bank of
India.
Earlier, Small and Medium Business Development Chamber of
India's President, Chandrakant Salunkhe, said that economic
downturn and credit crunch had taken a heavy toll of SMEs in
the country.
More than 1-lakh SMEs in India had to close their units
so far this year, he said, adding this figure could increase
in the coming year.
SMEs contribute nearly eight per cent of India's Gross
Domestic Product.
Bureau Report
First Published: Tuesday, December 23, 2008, 00:00