Banks urged to fulfill MSME loan target

The banks operating in Orissa have been urged to fulfill their micro, small and medium enterprises (MSME) loan target set for the current fiscal.

They were requested to sensitise their branch managers to increase the lending under Credit Linked Capital Subsidy Scheme (CLCSS) for technical upgradation of MSMEs. Similarly, the banks have been requested to clear the MSME loan proposals pending with them.

The Khadi and Village Industries Board (KVIB) was also requested to revisit the targets given to various banks in view of the low targets set for the co-operative banks in the Pradhanmantri Employment Guarantee Programme (PMEGP).

This was decided at the 116th State Level Bankers’ Committee (SLBC) meeting held here today. While the credit given to MSMEs in the state was 11.8 percent of the net bank credit by the end of September 2008, there is huge scope for increasing the lending in this sector.

 

Delivering the key note address at the SLBC meeting, the finance minister Prafulla Chandra Ghadai called upon the banks to ensure that the loans extended by the Micro-Finance Institutions (MFIs) to the rural poor carry reasonable rate of interest. Since the MFIs are uniquely positioned to reach out to the rural areas, this requires urgent attention by the banks.

Expressing his concern over the decline in the credit-deposit (C-D) ratio in the state to 69.12 percent by the end of September 2008 compared to 77.91 percent a year before, the finance minister said, the CD ratio of some banks has been very low compared to national average.

It includes banks like Allahabad Bank, Canara Bank, IDBI Bank, Punjab National Bank, State Bank of Hyderabad, State Bank of Meysore, United Bank of India, Federal Bank, Axis Bank, HDFC Bank, IndusInd Bank among others. There has been no improvement though the issue has been discussed in the SLBC meeting.

S K Goel, chairman and managing director (CMD), Uco Bank and the chairman SLBC said, there is enough opportunities for lending beyond the mineral sector in Orissa. Since the small and medium enterprises (SMEs) sector is the second largest employment generating sector of the state, it needs priority attention in lending. He suggested the banks to provide adequate and timely credit for the SMEs and increase lending under the cluster approach. Kaza Sudhakar, regional director, Reserve Bank of India said, large areas of the state continue to be unbanked. The banks operating in the state must attempt to open branches in the unbanked areas along with the branches in urban areas.

About the SME loans, Sudhakar said, more than 55 percent of the SME loans were sanctioned by the State Bank of India (SBI).