FM miffed with lower credit flow to priority sectors

Banks told to prepare a plan for agri, MSME and export sectors.

Finance Minister Pranab Mukherjee on Tuesday expressed disappointment over the level of credit disbursement by banks to three priority sectors — agriculture, micro, small and medium enterprises (MSMEs) and export.

Speaking at a seminar organised by the Maharashtra Pradesh Congress Committee’s industry cell here, Mukherjee told banks to prepare a roadmap at the beginning of the banking year and complete the credit disbursement to all priority sectors.

“I have already conveyed my dissatisfaction to the Department of Banking for the present level of aggregate credit disbursement to agriculture, MSME, export and other priority sectors during the banking year. Banks have been asked to prepare a roadmap in consultations with chief ministers and state finance ministers and carry out the disbursement. The chief ministers have also been requested to hold at least one meeting every month with banks to take stock of the situation,” he said.

On base rate, he said the new regime would make lending by commercial banks transparent and help MSMEs get more funds at favourable rates.

Mukherjee devoted most of his time to issues being faced by MSMEs and the various decisions taken by the Centre for its growth. The central government was committed to ensure adequate credit flow to the sector, he said.

“The government is trying to ensure increased flow of funds for the sector at affordable rates. Small Industries Development Bank of India as well as National Bank for Agriculture and Rural Development meet various developmental needs of the sector by wide-ranging promotional and development activities.”

Mukherjee admitted the MSME sector was facing several challenges that included non-availability of state-of-the-art technology, low production capacity, inefficient marketing, non-availability of skilled labour at affordable cost and delayed payments by buyers.

However, he said the rollout of the goods and services tax would not only ease the tax burden but also spur demand for the sector in a big way as tax rationalisation would unleash internal trade.

Further, the Direct Tax Code, which would be effective from the next financial year, would cut compliance costs and help the sector become more competitive, he said.