MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI NAMO NARAIN MEENA)
(a) & (b): In the Budget announcement for the year 2009-10, Finance Minister had provided
a Special Fund of Rs. 4000 crore out of Rural Infrastructure Development Fund (RIDF) to
facilitate the flow of credit at reasonable rates through Small Industrial Development Bank(SIDBI). This fund was to incentivize the banks and State Financial Corporations (SFCs) to
lend to Micro & Small Enterprises (MSEs) by refinancing 50% of their incremental lending
to MSEs.
(c) & (d): Credit is available for MSMEs as there is adequate liquidity in the Banking
System. However, the major source of complaints of MSME Associations relates to cheaper
credit to MSMEs. RBI has deregulated the interest rates on advances above Rs.2 lakh with
effect from October 18, 1994 and the rates of interest on such advances are determined by
the banks themselves subject to BPLR and Spread guidelines. For credit limits up to Rs.2 lakh,
banks should charge interest not exceeding their BPLR.
(e): To minimize the impact of Global financial crisis, Government of India had announced
two stimulus packages on 7th December, 2008 & 2nd January, 2009 under which a number of
measures were announced for various industries apart from a Line of Credit of Rs.7000 crore
to SIDBI to support incremental lending, either directly to MSMEs or indirectly via Banks,
NBFCs and SFCs.
Further, Banks have initiated establishing SME HUB, SME HELPLINE, SME CARE Centres
etc. Banks are giving composite loans to MSME through Single Window. All the Banks have
adopted MSE Code. Banks have put in place Debt Restructuring Mechanism; and also introduced
Non-discretionary OTS Scheme, collateral free lending etc. As most of the Banks have tie-ups
with insurance companies, they are also able to provide insurance services through branch
outlets.
Besides, to resolve a number of issues which affect the growth of MSME Sector, Prime
Minister constituted a high level task force which held detailed discussions with all stake
holders and drew up an agenda for action. A high level council on micro and small enterprises
is to monitor the implementation of the recommendations and the agenda for action.