RBI instructs banks asked to help MSMEs | business | Hindustan Times
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RBI instructs banks asked to help MSMEs

The Reserve Bank of India has instructed all banks to extend a helping hand to micro, small and medium enterprises (MSMEs), RBI deputy governor KC Chakrabarty said today, but added that the MSMEs should not seek concessional credit.

business Updated: May 21, 2010 20:51 IST

The Reserve Bank of India has instructed all banks to extend a helping hand to micro, small and medium enterprises (MSMEs), RBI deputy governor KC Chakrabarty said today, but added that the MSMEs should not seek concessional credit.

"MSMEs should not to ask for concessional credit. And units that are unviable and not creditworthy should not be given credits," Chakrabarty said after releasing the India, Micro, Small and Medium Enterprise Report 2010 at a function in Kochi.

"What weaker people require is adequate and timely credit, not cheap credit. We are not in favour of subsidising for the poor," he added.

Banks should be allowed to do business at appropriate rates of interest, he said.

"We will focus on the rehabilitation of MSMEs. During the global meltdown, some units will fail. From RBI there is no policy gap. There are shortcomings and we have to collectively bridge this gap," he said.

He said that of the over 600,000 villages in India, only 35,000 have access to banking services even after 40 years of nationalisation. "We have a largescale financial exclusion. MSMEs need to be made a part of the integrated planned growth," he said.

By March 2012, all villages with population of over 2000 would have access to banking services. By 2015, all villages should have banking services and all households must have bank accounts, he said.

This had not happened over the last 40 years due to technological constrains, he said, adding that MSMEs should help bring in appropriate cost-effective technologies.

Stating that the state government and NGOs must work together to ensure aid for those who need it, he said that the Prime Minister has also appointed a task force to help MSMEs.