RBI says funding still an issue for small firms

Shortage of equity and long-term funds continue to halt the growth of small and medium enterprises in the country, Rerserve Bank Deputy Governor Usha Thorat said today.

"SME sector continues to be important in terms of its contribution to GDP and employment...Unavailability of sufficient equity, long-term capital are the typical problems (faced by SMEs)," Thorat said at a seminar here.

In its quarterly review of the annual monetary policy later this month, the apex bank is widely expected to announce a slew of supportive measures for the fund-starved sectors such as SMEs.

This may include extension of the restructring facility till December, relaxation in the NPA norms in infrastructure lending and provisioning requirements in certain segments.

Noting that crisis in the global financial sectors has impacted the business of Indian companies as well, Thorat said banks need to be given time to restructure their loans given the current scenario.

"A certain amount of time was needed to protect the economic value of assets," Thorat said.

Recently, in a meeting with the apex bank, bankers had asked for then extension of the restructuring facility to December 30 against the earlier deadline of June.