Credit flow to MSME sector up 100% in two years: RBI

Credit flow to micro, small and medium enterprises (MSMEs) has more than doubled in two years to Rs 2.57 lakh crore in the financial year ending March 2009, Reserve Bank of India deputy governor K C Chakrabarty said.

"So, Rs 1.27 lakh crore to Rs 2.57 lakh crore in two year time as credit to MSME sector, still we are saying banks are not giving credit," Chakrabarty said today at a conference on finance availability for MSMEs by industry body CII.

Asking entrepreneurs to come up with viable projects that can convince bank branch managers of repayment of the loan, he said there is no shortage of funds and industrialists must understand the difference between money and credit.

"Today, there is no bank in this country who will refuse money. Every bank is sitting on tonnes of money ... As Reserve Bank, I can tell you there is no dearth of credit," he said.

"Your problem is you don't require credit, you require money," he said chidding those who fail to see 'credit has to be self-liquidating on a viable project and has a cost'.

Banks should not be as aggressive as venture capitalists and must do their own assessment before advancing loans without depending on the credit rating agencies, he said.

However, emphasising the importance of the MSME sector, he said no global company can do without them and the country needs a robust MSME sector to grow at a rate of 10 per cent for the next 20 years.