Govt should enhance credit flow to MSMEs: FISME

The government should chalk out measures to increase credit flow to medium and small-scale enterprises to help tide over the global downturn, an apex MSME body has said.     

The need to bolster credit lines to intermediary financial institutions, such as NBFCs, are vital for ensuring flow of credit to micro, small and medium enterprises (MSMEs), Federation of Indian Small and Medium Enterprises (FISME)said.     

"Banks have not taken adequate steps to provide credit to the sector, as was announced by the government under the two stimulus packages," FISME Secretary General Anil Bhardwaj said.     

Bhardwaj insisted that 15 per cent of the priority sector lending be left exclusively for the small units.     

Challen Forging Ltd, an automobile component maker, Executive Director Viney Jain said the rate of interest on term loans, working capital and other types of credit facilities for SMEs is high as compared to large industries.     

"Although the Reserve Bank had reduced key rates, but even SIDBI and public sector banks are not ready to pass on that benefit to actual users," Jain said.     

About 12.8 million MSMEs in the country provide employment to over 42 million people and account for 45 per cent of the country's factory output and nearly 40 per cent of exports.