One of the measures to help improve bank credit flow to micro, small and medium enterprises (MSME) is for banks to assess the officials concerned for promotions on the basis of disbursements made to such units.
Stating this, Special Chief Secretary (Finance) K. Pradeep Chandra explained that unless officials were pro-actively rewarded, the existing situation of MSME not getting adequate and timely bank credit would remain.
So long as the officials’ promotion is not linked to the quantum of loans sanctions, the “situation will not change despite RBI guidelines,” he told a bankers conclave that began here on Saturday.
The two day meeting on ‘financial opportunities for MSME sector’ is being organised by the Federation of Telangana and Andhra Pradesh Chambers of Commerce and Industry (FTAPCCI).
It is time RBI took a tough stand on banks not expanding coverage of SME loans under the CGTSME scheme, he said, adding that it is jocularly said “if you borrow Rs.10 lakh from a bank, then it is your problem. But if you borrow Rs.1,000 crore from a bank that is the bank’s problem.”
The more than Rs.5,000 crore borrowed by Kingfisher from a consortium of banks is now the problem of banks while thousands of promoters with SME loans of Rs.10 lakh face a daily problem of threat of action under the SARFESI Act, Mr. Pradeep Chandra said.
