(a) whether the Government have taken measures to boost financing for small scale
industries;
(b) if so, the details thereof including its status as on date;
(c) whether there are certain bottlenecks in such financing;
(d) if so, the details thereof; and
(e) the steps taken in this regard?
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ANANDRAO VITHOBA ADSUL):
(a) to (e) With a view to ensure enhance flow of credit to SSI Sector, Reserve Bank of India
(RBI) and the Government have inter-alia taken the following measures:
(1) Banks have been advised to ensure that out of their total funds lent to SSI Sector,
atleast 40%.emit should be made available to units with investment in Plant and Machinery
upto Rs. 5lakhs and 20% should be made available to units with investment in plant and
machinery between Rs. 5 lakhs and Rs. 25 lakhs. Thus 60% of the funds earmarked for SSI
Sector should go to small units in tiny sector.
(2) In the Mid-Term Review of Monetary and Credit.Policy 2003-04 announced by RBI
Governor,Banks have been advised to increase the limit of dispensation of collateral
requirement for loans from the existing level of Rs. 15 lakhs to Rs. 25 lakhs based on good
track record and financial position of the SSI Units.
(3) Banks have been advised to enhance the composite loan limit from Rs. 25
lakhs to Rs. 50 lakhs.
(4) Banks have been advised to open at least one Specialized SSI branch in each district.
Further, banks have been permitted to categorize their general banking branches having 60% or
more of their advances to SSI sector as specialized SSI branches in order to encourage them
to open more specialized SSf branches for providing better service to this sector as a whole.
(5) Introduction of new Credit Guarantee Scheme for Small Industries by SIDBI, Collateral Free
Loans upto Rs. 25 lakh is covered for guarantee under the scheme.
(6) As per the decisions taken at the Standing Advisory Committee Meetings of RBI, the banks
have been advised to fix self set target for growth in advances to SSI Sector over the
pervious year`s achievement and overall trends in growth of net bank credit.
(7) As per the announcement made by the Hon`ble Finance Minister in the Union Budget 2003-04
IBA have already advised the banks to adopt the interest rate band of 2% above and below its
prime lending rate (PLR) for secured advances. The individual banks will be adhering to the
instructions issued by the IBA with the approval of their respective Boards. Banks have also
been advised to examine having three slabs for rate of interest for loans upto Rs. 50,000/-
between Rs. 50,000 and Rs. 2,00,000/- and those above Rs. 2,00,000/-.Banks have been advised
to adhere to all the policy measures/instructions issued by RBI from time to time.