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MSME ministry to ask banks heads to improve credit flow to sector

NEW DELHI: The Ministry of Micro, Small and Medium Enterprises will soon convene a meeting of chiefs of banks to persuade them to improve flow of credit to the MSME sector.

"We are soon planning to call CMDs of banks to find out a solution to the problem of inadequate 
credit flow to the sector," Minister of State (Independent Charge) for MSME K H Muniyappa said at a CII event here. 

"We will also ask banks to speed up their advances to the sector as timely availability of credit is really important for small units for their development," he added. 

The Prime Minister's Task Force on MSMEs had recently recommended 20 per cent year-on-year growth in credit to micro and small enterprises to ensure enhanced credit flow. 

However, most of these units still face problems in getting easy access to finance. 

Secretary in the MSME Ministry Madhav Lal said major factors affecting growth of the sector include shortage of working capital, lack of demand, marketing problems, shortage of raw-material, power crunch and labour issues. 

To address these issues, a government-panel which is headed by the Secretary has prepared a report and submitted it to Cabinet Secretary 
Ajit Kumar Seth, suggesting ways to improve credit flow and efficient framework for closure of unviable businesses. 

The sector has been witnessing a slow growth with its share of exports falling from 40 per cent to 36 per cent lately. 

The sector contributes over 8 per cent to the country's 
Gross Domestic Product (GDP) and accounts for 45 per cent of the manufacturing sector. There are around 3.6 crore such enterprises, employing over 8 crore people.