SME Times News Bureau | 26 Jun, 2019
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.