SME Times News Bureau | 29 Oct, 2009
Finance Minister Pranab Mukherjee on Wednesday asked public sector banks (PSBs) to increase lending to Micro & Small Enterprises (MSEs) and other employment-generating sectors including agriculture during the second half of this fiscal to take advantage of higher demand for credit during the period.
"Taking advantage of the upcoming busy season, banks should gear up to enhance credit flow to the employment generating sectors, especially agriculture and the Micro & Small Enterprises," Mukherjee said at a meeting of chief executives of north-based PSBs in New Delhi.
Pointing out that the growth rate of advances to micro and small enterprises has been approx. 13 percent for the last six months, Mukherjee opined that this needs to be improved in view of the target of 20 percent on year on year growth in flow of credit that is required to be achieved annually for this sector.
He said that in order to meet their current year priority sector lending target for agriculture credit, the banks need to enhance the credit flow to agriculture for the subsequent quarters of the financial year.
Mukherjee said the government has come out with an extra one per cent subvention on interest to farmers who pay their dues in time and asked banks to make use of this scheme to improve repayments.
The Finance Minister said that the government is providing interest subvention of 1 percent on all individual housing loans up to Rs.10 lacs for units costing up to Rs. 20 lacs and advised the Banks to pay due attention to such house loan borrowers.
He emphasized the need to target these loans to the rural areas so as to meet the housing needs of the rural population.
Highlighting public sector banks' role in achieving the target of inclusive growth, Mukherjee urged them to rapidly scale-up their efforts to reach banking to the inaccessible regions of the country through alternative methods and technological means.
