MSMEs should not seek concessional credit: RBI

The Reserve Bank (RBI) has instructed all banks to extend a helping hand to Micro, Small and Medium Enterprises (MSMEs), RBI Deputy Governor K C Chakrabarty today said but asked the enterprises not to seek concessional credit.

"MSMEs should not to ask for concessional credit and units which are unviable and not creditworthy, should not be given credits", Chakrabarty said after releasing the India, Micro, Small and Medium Enterprise Report 2010 at a function here.

"What weaker people require is adequate and timely credit and not cheap credit.We are not in favour of subsidisng the poor. Banking business should be done at affordable price and Banks should be allowed to do business at appropriate rate of interest", he said.

"We will focus on rehabilitation of MSMEs. During global meltdown, some units will fail. From RBI, there is no policy gap. There are shortcomings and we have to collectively bridge this gap", he said.

India has over 600,000 villages. Even after 40 years of nationalisation, only 35,000 villages have access to bank services. "We have a large-scale financial exclusion. MSME need to be made part of integrated planned growth", he said.

"By March 2012, all villages with over 2000 population will have banking services and by 2015 all villages should have banking services and households should have bank accounts," he said.

This has not happened since the last 40 years as technology was lacking, he said adding the MSMEs should also bring in appropriate cost effective technologies.

The state government and NGOs must act together and ensure that those who require help, get the help they need. The Prime Minister has also appointed a task force to help the MSMEs, he said.