Finance Ministry tells state-run banks to shore up credit to MSMEs

New Delhi, Jun 28: The finance ministry has told the chief executives of all public sector banks (PSBs) to review credit facilities made available to micro, small and medium enterprises (MSMEs) and take ‘corrective’ measures to ensure the firms get adequate funds.
The finance ministry has told the PSB chief executives in an official communication to assign a chief general manager, or a general manager-level officer to “do an in-depth analysis of the progress made and issues in availability of credit, still being faced by the MSMEs”.
While taking “corrective actions” and doing the analysis, nodal general managers are supposed to submit details to the finance ministry of MSMEs taking credit from banks, non-performing MSME accounts, MSME accounts restructured following to the Reserve Bank of India’s (RBI’s) January scheme and the MSMEs still uncovered by it, among others.
“The heads of all PSBs have been also asked that all sincere efforts should be made so that during the process of formalisation, the MSMEs may not suffer in want of credit which should be available to them as per the extant guidelines,” the finance ministry said in an official statement.
Recently, an RBI expert committee, led by former Securities and Exchange Board of India chairman U K Sinha, on MSMEs recommended doubling the cap on collateral-free loans to Rs 20 lakh from the current Rs 10 lakh. It also recommended creating a stressed asset fund of Rs 5,000 crore for MSMEs to protect them from distress caused by external circumstances.