Credit coverage to MSMEs dismal, says Naveen

Peeved with the dismal performance of banks in advancing credit to the micro small and medium enterprises (MSMEs), the state government has asked the lenders to be pro-active in giving loans to the MSME units.

"The coverage of credit to the (MSME) entrepreneurs of the state is dismally poor. During the current financial year, as on September 2014, only 6.7 percent of the credit has been covered under the credit guarantee scheme of Government of India," said Chief minister Naveen Patnaik at the inaugural ceremony of Odisha MSME Trade Fair-2015.

He called upon the banks to proactively consider covering more and more of the first generation entrepreneurs under the scheme in fulfilling their dreams of setting up units.

"The Reserve Bank of India (RBI) had constituted a working group to study the problems of micro and small enterprises (MSE), particularly with respect to rehabilitation of potentially viable sick units. It has given elaborate guidelines for rehabilitation of sick units. I urge all banks to follow the guidelines with all seriousness to create a win-win situation for them and the entrepreneurs," Patnaik said.

State MSME minister, Jogendra Behera also echoed the sentiment, saying access to bank finance for MSMEs is a big problem area in the state.

"The banks should not deviate from RBI guidelines as incorporated under the CGTMSE scheme. They should not insist on collateral security up to the financing level of Rs 100 lakhs for MSME entrepreneurs as per the guidelines. Then only new start-ups can come up in large numbers," Behera said.

As per latest census, there are about 1.5 million MSME enterprises providing employment to 3.3 million people in the state. Odisha is among the top ten states in generating employment through MSME sector. While the growth rate of MSMEs in Odisha is 32 percent against the all India average of 28 per cent, the rate of growth of employment has been 29 per cent against the national average of 26 per cent.

Patnaik said, the state government is contemplating to bring out a procurement policy for MSEs.

For giving exposure to the state based MSME units, an initiative - MSME Bazar is taken up by MSME department where the local entrepreneurs can upload their product brochure, purchase procedure on a developed website.

MSME contributes 40 per cent to the state's exports and about 45 per cent of industrial workers are employed in the sector. Speaking on the occasion, Chief Secretary Gokul Chandra Pati said, only 15 per cent of the loans disbursed to the MSME sector are covered under the Credit Guarantee Scheme. The state has identified agro processing sector and building and construction technology sector as the potential sectors for the growth of MSMEs in the state.