New Delhi, Jan 24: In tune with Prime Minister Atal Bihari Vajpayee's recent promise, the Government and Reserve Bank of India are all set to enhance credit flow to small scale sector and are likely to ask banks to extend loans at competitive prime lending rates. Official sources told a news agency here that the measures were discussed at a meeting convened by RBI Deputy Governor Vepa Kamesam with representatives of SSI sector in Mumbai recently. These would be discussed with planning commission after which formal directives will be issued by the RBI. Prime Minister Vajpayee had in his address at a global summit recently raised the issue of high cost of credit for the SSI and had called for remedial measures. The measures being considered include linking growth of deposits with banks directly with lending to the SSI sector as at present no sub-target has been fixed for SSI lending within the priority sector lending. Another measure being considered is to ensure that interest on loans upto Rs two lakhs is given at the Prime Lending Rate (PLR), they said adding there was also an agreement that this limit could be enhanced in due course.

The meeting also agreed to enhance composite loan limit which includes both working capital as well as term loans to Rs 35 lakh from Rs 25 lakh at present.

In addition to this it was also agreed that banks should be asked to issue loans upto Rs five lakh without collateral and disbursal of loans between Rs five lakh to Rs 25 lakh should be guaranteed under credit guarantee fund trust scheme.


Bureau Report