Pranab Urges Banks & States to Reach MSMEs, Credit Flow to Micro Small and Medium Enterprises, 50 Percent Growth in Credit Flow to MSMEs in Rajasthan and Gujarat, Credit Flow to MSMEs in India

Pranab Mukherjee (extreme left) addressing a press conference after the meeting with Chief Ministers and Bank Heads in Mumbai.

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SME Times News Bureau | 29 Jun, 2010
Finance Minister Pranab Mukherjee Monday said that credit flow to micro, small and medium enterprises (MSMEs) in most part of the central and western states is still lower and emphasized the need to extend mainstream banking facilities to micro firms, manufacturing and service sectors, and people from 'all strata' including small farmers and the poor.

"In the area of Micro and Small Enterprises’ Credit, whereas the States of Rajasthan and Gujarat have shown more than 50 percent growth in credit flow, other states have reflected lower credit growth," Mukherjee said while addressing a meeting of chief ministers, representatives of the public sector banks, the Reserve Bank of India and NABARD in Mumbai.

He added, "I would urge the State Governments and Bankers to position themselves to finance the emerging demand for credit from all sectors in this region, whether from agriculture, manufacturing or services".

According to Mukherjee, for long the financial sector had ignored the needs of the poor, the marginalised, small farmers and micro-entrepreneurs. "You will agree that there is urgent need for including people from all strata in the mainstream banking system and for putting our country firmly on the path of overall growth and development," he said.

The Finance Minister added that though efforts are being made to improve the credit flow to housing, weaker sections, minority community and education loans, the credit growth in these sectors need closer monitoring in the State Level Bankers Committees.

Mukherjee also pointed out that on the Credit Deposit Ratio, except Maharashtra, Rajasthan and Gujarat, all other states in the central and western region have a lower ratio than the benchmark of 60 percent.

He also asked the Bank of Maharashtra, Dena Bank, State Bank of India, Central Bank of India and Bank of Baroda to ensure that financial inclusion is integrated with the technological development of banking infrastructure in rural and semi-urban areas.

"I advise the bank to convert savings from semi-urban and rural market into financial assets through effective financial inclusion which will strengthen financial deepening," Mukherjee said.

On agriculture credit flows for which a target has been fixed at Rs.3,75,000 crore, Mukherjee said all the states in the region have increased agriculture credit flow by over 25 percent during the last year, which was very encouraging.

While Maharashtra and Chhattisgarh have shown remarkable growth in credit to agriculture, Madhya Pradesh, Rajasthan, Gujarat and Goa need to accelerate their agriculture growth momentum.

Touching upon the progress of centrally sponsored schemes in the states, Mukherjee said that all states, barring Goa, have signed a memoraudum of understanding with the Centre to implement reforms in the short term credit co-operatives sectors (STCCS).

Expecting full implementation of the STCCS Package, Mukherjee asked the Goa government to sign the MoU with the Centre and NABARD so that recapitalization assistance can be released.

Present at the meeting were Minister of State for Finance N.N. Meena, Maharasthra Chief Minister (CM) Ashok Chavan, Rajasthan CM Ashok Gehlot, Madhya Pradesh CM Shivraj Chauhan, Goa CM Digambar Kamat, Chattisgarh Agriculture Minister Chandrashekhar Sahu and Gujarat Finance Minister Saurabhbhai Patel.