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Banks to lend more to small entities

K.H. Muniyappa in Calcutta on Friday. Picture by Kishor Roy Chowdhury

Calcutta, Dec. 6: The ministry of micro, small and medium enterprises (MSME) will meet the heads of banks on Monday and urge them to step up their lending to the sector.

K.H. Muniyappa, the Union minister of state (independent charge) for MSMEs, today said the banks needed to be more liberal in their loans. His comments follow a recommendation by a task force on MSMEs, set up by Prime Minister Manmohan Singh, recommending a 20 per cent year-on-year growth in credit to micro and small enterprises.

According to data from the Reserve Bank of India, credit to the MSME sector till the end of October has grown 15.9 per cent over the corresponding period a year ago.

“I am looking forward to a meeting with chairmen of various banks on December 9 to understand the difficulties they are facing while financing to the sector and will urge them to increase their lending to the sector,” Muniyappa said.

He was speaking on the sidelines of a seminar of the Bengal Chamber of Commerce and Industry here today.

Muniyappa said the ministry was looking to set up 100 enterprises per district every year in all 650 districts under Prime Minister’s Employment Generation Programme. He added that the support of the banks was crucial to the success of the credit-linked subsidy scheme. He added that the government had set a target to create 5 lakh enterprises under the scheme.

Earlier, at an Assocham event in Delhi the minister said he expected the share of medium and small units in total export to go above 50 per cent.

“Last year, the sector’s contribution to India’s total exports was 40 per cent, but this year it has declined to 36 per cent, mainly because of weak demand in global markets. Now, we are trying to increase the share beyond 50 per cent.”

In the Twelfth Five-Year Plan (2012-17), the government raised the budget allocation for the sector to Rs 24,000 crore from Rs 11,000 crore in the last plan period.

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