Achieve 20% growth in credit supply to MSEs: RBI asks banks

The Reserve Bank of India (RBI) has asked banks to provide more loans to micro and small units so that credit to them grows by 20 per cent annually, as sought by a task force appointed by Prime Minister Manmohan Singh.

"Achieve a 20 per cent year-on-year growth in credit to micro and small enterprises (MSEs)...," the RBI said in an advisory to banks.

The recommendation was one of the proposals made by the task force set up by Singh in September, 2009, and headed by his Principal Secretary, T K A Nair, to look into issues concerning the crisis-hit sector.

The RBI has also asked banks to achieve 10 per cent annual growth in the number of micro enterprises accounts they handle.

The banks are to provide 60 per cent credit to micro units out of the total loans extended to micro and small units by 2012-13, the RBI further said.

In addition, the RBI advised banks to open more MSE-focused branch offices in different clusters, which can also act as counselling centres for these units. Each lead bank of a district may adopt at least one such cluster, the central bank said.

The MSME sector, which has 2.61 crore units, contributes about 45 per cent to India's total manufactured output and close to 40 per cent to the country's exports.The Reserve Bank of India (RBI) has asked banks to provide more loans to micro and small units so that credit to them grows by 20 per cent annually, as sought by a task force appointed by Prime Minister Manmohan Singh.

"Achieve a 20 per cent year-on-year growth in credit to micro and small enterprises (MSEs)...," the RBI said in an advisory to banks.

The recommendation was one of the proposals made by the task force set up by Singh in September, 2009, and headed by his Principal Secretary, T K A Nair, to look into issues concerning the crisis-hit sector.

The RBI has also asked banks to achieve 10 per cent annual growth in the number of micro enterprises accounts they handle.

The banks are to provide 60 per cent credit to micro units out of the total loans extended to micro and small units by 2012-13, the RBI further said.

In addition, the RBI advised banks to open more MSE-focused branch offices in different clusters, which can also act as counselling centres for these units. Each lead bank of a district may adopt at least one such cluster, the central bank said.

The MSME sector, which has 2.61 crore units, contributes about 45 per cent to India's total manufactured output and close to 40 per cent to the country's exports.