RBI asks banks to ensure easy credit flow to MSMEs
Mumbai: RBI Governor D Subbarao Tuesday said the central bank will soon be holding meetings with lenders to improve flow of credit to micro, small and medium enterprises (MSMEs).
The Governor said the bank chairmen have been asked to study the issues relating to SME financing with their hierarchies including the field staff in a month, after which they will be meeting deputy governors Anand Sinha and K C Chakrabarty.
Conceding that MSMEs are not sufficiently covered on the "radar screens" of the RBI and bankers, Subbarao said, "We want to acknowledge that it is a big sector contributing to our economic growth and at a time like this we should be focusing on that."
Subbarao said the issues on the table are not restricted to restructuring the advances to SME sector but also timely availability of adequate credit, an overall nurturing of such companies by the banks and doing "everything in time" to not exacerbate the distress.
"The SME sector is an important lobby, it is not as articulate as the other lobby and we need to pay adequate attention to that especially because it is employment-intensive and dispersed across the country."
According to the SME Chamber of India, the sector contributes 45 percent of industrial output, 40 percent of exports, employs 60 million people, supports 1.3 million jobs every year and contributed 17 percent to the GDP in 2011.