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| MSME credit to cross Rs 25,000 cr this year in UP |
| Virendra Singh Rawat / New Delhi/ Lucknow Jan 23, 2010, 00:14 IST |
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The total credit to the Micro, Small and Medium Enterprises (MSME) by commercial banks in Uttar Pradesh is likely to breach the figure of Rs 25,000 crore this financial year.
The figure has already crossed Rs 23,000 crore so far, and as the current financial year still has two months to go, the mark of Rs 25,000 crore is quite achievable.
“A lot of industrial activity takes place during the first three months of every calendar and it is certain that the MSME advances will be above Rs 25,000 crore this fiscal,” Punjab National Bank (PNB) general manager Rohtash Kumar told Business Standard.
The actual MSME credit would be much higher as advances by Regional Rural Banks (RRBs) are not included in the figure of Rs 25,000 crore.
UP has a large MSME base estimated at about 1.2 million, including 500,000 registered units. There are several industrial pockets in Varanasi, Allahabad, Moradabad, Saharanpur, Lucknow, Kanpur, Agra, Ferozabad, Meerut, Bhadohi, Ghaziabad, Noida, Bareilly, Gorakhpur, Khurja, Aligarh and Mathura.
MSME accounts for about 8 per cent of the State Gross Domestic Product (SGDP) of around Rs 315,000 crore and almost 50 per cent of the industrial output.
As per the Reserve Bank of India (RBI) guideline, loans up to Rs one crore to MSMEs can be given without collateral so as to provide easy finance to them.
The percentage of credit to MSME sector Net Bank Credit (NBC) stands at 17 per cent, which is not too encouraging though.
“There is need to increase the total funding to MSMEs in UP to harness all the untapped potential in this sector. However, the banks would need to reach them by expanding their touch points,” he added.
At present, UP has a network of over 11,500 branches of the various commercial, RRBs and cooperative banks. There are around 3,000 RRBs.
The banks have deposits and advances base of Rs 270,000 crore and Rs 126,000 crore respectively.
The credit deposit ratio stands at 47 per cent, which shows a high growth potential for expansion of the banking sector in the state.
The lending to the agriculture sector, which is the major base to the state’s economy and employment, stands at Rs 39,000 crore. The agriculture sector lending percentage is 31 per cent compared to the RBI benchmark of 18 per cent.
So far, 34 of the total 71 districts in the state has been declared 100 per cent financially included.
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