The Reserve Bank of India (RBI) and the Government has taken several steps time to time to ensure credit flow to the Micro, Small and Medium Enterprise (MSME) sector, informed Union Minister of Finance Nirmala Sitharaman.

RBI and the Government have taken several steps to ensure access of credit to MSMEs, the minister said.

These measures include, among others, advice to all Scheduled Commercial Banks (SCBs) to achieve a 20% year-on-year growth in credit to Micro and Small Enterprises (MSEs) and allocation of 60% of the MSEs advances to the Micro Enterprise Accounts, the minister added.

The central bank and the Centre has also taken asked SCBs to achieve a 10% Annual Growth in number of Micro Enterprise Accounts, operationalizing at least one specialised MSME Branch in every district, simplified computation of Working Capital of MSE units to make it minimum 20% of the Projected Annual Turnover of the unit for borrowable limits up to Rs.5 crore

She added that RBI has deregulated the interest rate on advances and these interest rates are determined by banks with the approval of their respective Board of Directors subject to extant guidelines. 

Loans to MSMEs are provided as per the interest rate structure of the bank.  The interest rate is finalized based on various factors which inter-alia include, cost of funds to the institution, credit rating of the unit, tenure of loan, purpose of loan etc, the minister said.

Published On : 26-06-2019

Source : Sme Times