'Declining credit offtake a cause of concern for MSME export sector'

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SME Times News Bureau | 14 Jul, 2009
A Sakthivel, President, Federation of Indian Export Organisations (FIEO) while commenting on the latest update of the RBI stated that the non-food credit had declined to Rs. 3,58,494 crores in 2009 from Rs. 4,88,719 crores in 2008. The percentage variation for the year-on-year figure is 36.32%.

The FIEO Chief, however, observed that while the bank credit to the commercial sector had declined in 2009 on a year-on-year basis to 15.5% (Rs.4,05,176), the credit offtake in 2008 was 24.5%. At the same time, the net bank credit to the government on a year-on-year basis had increased from Rs.80,371 crores to Rs.4,54,313 crores which is nearly a five fold increase over the previous year.

Elaborating further Sakthivel stated that investments in Government securities had almost become three fold to Rs.3,24,213 crores at Rs.1,42,800 crores in 2008 while PLR's had remained constant in range 11% to 12.25% in spite of the declining offtake to the commercial sector.

The president, FIEO stated that a declining credit offtake, higher investments in government securities besides interest rates which show no sign of moving southwards may not augur well for the MSME export sector in the existing slow down.