Press Information Bureau

Government of India

Ministry of Finance

12-August-2011 16:37 IST

RBI Advises Banks to Achieve Target of 60 Percent of MSE Advances for Micro Enterprises by 2012-13

In order to ensure availability of sufficient credit to MSE Sector, Banks have been advised by RBI to achieve the following targets:

i) 60% of MSE advances for Micro Enterprises by 2012-13, to be achieved in three stages: i.e. 50% by 2011, 55% in 2012 & 60% in 2013.

ii) Banks are advised to achieve a 20% year-on-year growth in credit to micro and small enterprises.

iii) Banks are advised to achieve 10% annual growth in the number of micro enterprises accounts.

Reserve Bank of India (RBI) has reported that interest rates have been deregulated by RBI and are governed by the banks' own lending policies. All categories of loans are henceforth priced only with reference to the Base Rate and Banks are not permitted to lend below the Base Rate with effect from 1.7.2010.

Small Industrial Development Bank of India (SIDBI) has reported that total outstanding credit to MSME in Rajasthan as on March 31, 2011 stood at Rs. 1676 crore registering a growth of 81% from previous year.

This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a Question in Lok Sabha today.

DSM/PM

MSE credit targets drive banks to increase microenterprise lending and growth in account outreach under new guidelines. Banks are directed to reallocate MSE lending toward micro enterprises by achieving staged targets culminating in 60 percent of MSE advances for Micro Enterprises by 2012-13, with interim thresholds in earlier years. Institutions must sustain year-on-year growth in credit to micro and small enterprises and expand the number of micro enterprise accounts annually. All loans are to be priced with reference to the Base Rate and banks are not permitted to lend below the Base Rate with effect from 1 July 2010.