FM, Chidambaram says SMEs to get double credit by 2009-10
11 Aug '05
2 min read
The Government declared a new policy package to boost credit flows to the small and medium sector.
The policy has been designed specially for medium enterprises (ME) with investment in plant and machinery above the small-scale industry limit and up to Rs 10 crore.
The Finance Minister (FM), Mr P. Chidambaram unveiled the package in the Rajya Sabha.
SSI units are established with investments up to Rs 1 crore in plant and machinery, excluding few specified industries like pharmaceuticals, textiles and sports goods where the cut-off investment limit stands at Rs 5 crore.
The policy also offers one-time settlement (OTS) scheme for non-functional assets of banks and a corporate debt restructuring (CDR) method for the SME sector, same applicable to the larger companies.
Mr Chidambaram informed that that public sector banks have been urged to reach at a level of minimum 20 percent growth per year for the providing funds for small and medium enterprises.
This would result a double credit to the sector to Rs 1,35,000 crore by 2009-10, up from Rs 67,600 crore in 2004-05.
The PSU banks would also be forced to implement a transparent rating system with cost of credit, which is related to the credit rating of the enterprise, he added.
Chidambaram added that the Small Industries Development Bank of India (SIDBI) in alliance with Credit Information Bureau (India) Ltd (CIBIL) would accelerate the setting up of a credit rating agency.
The commercial banks (including regional rural banks) with over 67,000 branches will also support to provide credit cover on an average, to at least five new tiny, small and medium enterprises at each of their semi-urban/urban branches annually.
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