The Ministry of MSME is expecting clear-cut guidelines from Venture Capitalist (VC) and Private Equity (PE) firms to ease the flow of funds and investments in the sector in the near future.

Underscoring views in this context on the sidelines of an ASSOCHAM conference, 'SMEs: Finance with Governance' in New Delhi on Thursday, the MSME Secretary, Dinesh Rai said, "Venture Capitalists and Private equity funds are both needed by MSMEs. I definitely expect that they would give me some clear-cut guidelines about what they want in terms of incentives and concessions that would be required by the venture capitalist industry."

"Many a times venture capitalists and private equity players need some incentives themselves. This is a high risk area," he added.

He requested the VC and PE players to take a look at the matter and forward some clear recommendations to the MSME Ministry, "thereafter things would be placed in front of the Finance Ministry."

However, in this case some measures were taken before the budget announcement, but it is requisite to take up the matter once again, Rai informed.

The MSME Secretary said that huge investments should be made specifically in this sector as it has immense opportunity for growth.

"Invest more in the equity of micro, small and medium enterprises," he added.

Further, making observation on easing credit to the sector, Rai said that around 45 percent of priority sector lending by banks is going to the MSME sector, which should be 60 percent reasonably.

"Out of that there is a stipulation on whatever lending is going to the small and micro sector, 60 percent of that lending should go to the micro sector. The government again tries to push more money to the micro sector. Micro sector lending is up to Rs 25 lakhs," he said.

At present, banks need more time to capitalize it to 60 percent as the ministry has already raise the issue with a nod from Reserve Bank India (RBI), he added.

The Secretary also opined that the banks have asked for three years time but it should be achieved within two years, which is reasonable. This would definitely step up more credit and also unleash at least Rs. 50,000 crore.

Around 15 percent new account should be opened every year. And, this growth can be achieved in two years, which will benefit the first generation entrepreneurs as the percentage of new account growth is around 7-8 percent at present, Rai added.