Patna, June 17: The cabinet today approved the creation of a “revolving fund” to spur industrialisation in the state to revive the sick micro, small and medium units.

“To provide financial assistance to micro, small and medium industrial units of the state, the cabinet approved the industries department’s proposal to create a revolving fund of Rs 25 crore each to be paid to Bihar State Credit and Investment Corporation Limited (BICICO) and the Bihar State Financial Corporation (BSFC),” cabinet department principal secretary Brajesh Mehrotra said.

The BSFC provides financial assistance to micro and small enterprises, whereas BICICO gives loans to medium sector enterprises.

The sick units, which have become a major hindrance in the industrialisation process, would be provided soft loan at five per cent interest rate, the principal secretary said, adding that industrial units would have to take 70 per cent as bank loans, while the remaining or Rs 2.5 crore would be provided as soft loan through revolving fund.

The industrialists, however, termed the decision as a “drop in the ocean” which would not serve the very purpose for which the fund has been created for the revival of the industrial units.

“We had requested the revival of the two agencies long back but the decision to create a corpus of Rs 25 crore each for BICICO and BSFC is insufficient. Reason, the amount is too meagre to meet the purpose of reviving sick industrial units. The BSFC alone has the ability to provide loan of up to Rs 90 lakh to a single sick unit and there are about 1,000 such micro, small and medium industrial units in Bihar. Given the figures of sick units, one can imagine how the revival plan would work with the little amount,” Bihar Chamber of Commerce and Industries president P.K. Agarwal said.

Making a plea for providing Rs 1,000 crore each to BICICO and BSFC, PHD Chamber of Commerce and Industry’s state unit president Satyajit Kumar said there should be direct funding to sick industrial units through BSFC or BICICO but the funding to sick units should not be linked to banks as they are hesitant in advancing loans to the units which are already sick.

Citing the industrial incentive policy of 2006, Satyajit said there was a budgetary provision of Rs 5 crore to revive the sick units but the money could not be utilised as the authority concerned failed to identify sick units and the money lapsed.

Other decisions

The cabinet decided to invest money pertaining to Mukhyamantri Kanya Suraksha Yojana through IDBI and UCO Bank instead of UTI.

The cabinet also nodded to the finance department’s proposal for amendment in the rules for availing reimbursement on account of rail/air fare for going outside the state in case of medical emergency.