The Reserve Bank of India (RBI) is monitoring the credit flow to the micro, small and medium enterprises (MSME) and the revival of sick units in the state.
Since MSMEs contribute 60 per cent of UP’s industrial production, the state government has stressed on boosting the sector with easy working capital loans for realising its ambitious target of becoming a trillion-dollar economy by 2024.
There is an empowered committee to look after the lending activities in the state and the revival of the sick MSMEs, RBI regional director Lakshmi Kanth Rao told the media in Lucknow.
“Although, the commercial banks are directly involved in the revival of sick units, the RBI is actively monitoring the development,” he said.
Rao noted the MSME sector would play a vital role towards the prospective achievement of the trillion-dollar economy target in UP.
He said the UP chief minister had personally chaired the previous two quarterly state level bankers’ committee (SLBC) meetings here, which amply reflected the commitment of the state government to bolster the flow of credit to the economy.
“The one-district-one-product (ODOP) scheme together with the MSME sector have the potential to give a major push to the state’s economy,” Rao said adding the banks had so far overachieved their annual MSME credit target in UP.
Launched in 2018, the ODOP scheme is aimed at reviving UP’s indigenous industries through financial, marketing and training support with the help of banks, knowledge partners and private marketing entities, including ecommerce.
RBI today announced the launch of Financial Literacy Week (FLW) on the theme of ‘MSME’ during February 10-15, 2020. The FLW will be on creating awareness about aspects relating to formalisation, collateral free loan, discounting of receivables, rehabilitation of stressed units and timely repayment.
Meanwhile, the Adityanath government is eyeing 25 per cent higher MSME lending of Rs 65,000 crore in 2019-20 compared to the annual target of about Rs 52,000 crore for the current fiscal year.
“The progress in MSME advances has been good and we are confident there is a potential to further increase the credit flow. Therefore, we have urged the commercial banks to hike their annual MSME credit target,” UP MSME principal secretary Navneet Sehgal had earlier told Business Standard.
According to estimates, nearly 80 per cent of the country’s MSMEs, especially the micro units, still do not have access to institutional capital and they largely depend upon the unorganised players for meeting their financial needs.
According to the MSME export promotion council (MSME EPC), the state had posted 100 per cent growth in the sector with total number of units jumping from 4.4 million in 2015-16 units to 9 million in 2017-18.