Ministry lobbying PSBs to lend to small units at base rate

The Union ministry of micro, small and medium enterprises (MSME) is lobbying with the public sector banks (PSBs) to extend loan facilities to micro and small enterprises - one of the major sources of employment in the country - at the base interest rate. This would help the sector to access a vast amount of capital from financial and banking institutions at much cheaper rates in its bid to roll out quality products and run enterprises efficiently.

Kalraj Mishra, Union minister for MSME, last week met senior officials of banking and financial institutions so that an early decision is taken on this front with their concurrence, which will be duly endorsed subsequently by the Reserve Bank of India, the finance ministry and the Prime Minister's Office (PMO).

MSMEs across the country need capital at relaxed rates of interest to run their enterprises and cater to the needs of their larger counterparts as well as contribute substantially to India's manufacturing and external engagements, according to Mishra.

He said that after he had met representatives of a host of micro and small industry associations in Delhi about two weeks back, it was agreed that the MSME ministry would work towards ensuring that a base rate interest regime would be facilitated for small and tiny enterprises. The MSME ministry had also forwarded the small units' concerns to the PMO, Mishra added.

The minister's meeting with senior officials of banking and financial institutions was by way of follow-up action, to ensure that the base rate interest regime is offered to small and micro enterprises. Mishra emphasised the need for a focus on rural entrepreneurs, adding that his ministry has been working towards the setting up of Credit Guarantee Trust Funds to extend liberal packages to MSMEs. A provision for this has been incorporated in the new draft MSME Policy, he said.

The state governments have also been urged to contribute to the scheme and help promote the MSME sector, said the Minister, who added: "If you provide Rs 100 crore for this, a collateral-free loan of Rs 1,000 crore will be offered for promotion of MSME under the Credit Guarantee Fund Scheme."