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Friday, Jan 30, 2004

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`SMEs should have better access to finance'

Our Bureau

Coimbatore , Jan. 29

THERE is a growing concern over meeting the financial needs of the SMEs in not just the developing countries, but in almost all developed ones as well, Mr J.G. Gupta, Chief General Manager (Rural Planning and Credit Department), RBI said.

Addressing a seminar on `Alternative avenues for financing of SMEs' organised by the Confederation of Indian Industry (CII), Southern Region, Mr Gupta said that several initiatives were being taken to foster the development of SMEs and improve their access to finance.

However, the business environment should be conducive for enhancing credit flows, he said and emphasised the need for organising general awareness programmes on SME financing.

Reverting to the Credit Guarantee Fund Scheme launched by SIDBI for the SSI sector, he said that it was aimed at facilitating hassle-free credit and in encouraging banks to shift from collateral-based lending to security-oriented lending.

The Credit Guarantee Fund Trust for Small Industries was in the process of developing a Mutual Credit Guarantee Scheme, he said and pointed out that SIDBI was also encouraging the growth of venture capital industry for hi-tech SME units by promoting 13 State and Regional level funds and by setting up an all-India Venture Fund.

The Working Group on flow of credit to the SSI sector would look into the methods of utilisation of priority sector shortfall deposits with SIDBI and suggest appropriate institutional arrangement for enhancing the credit delivery on a timely basis and in adequate measures.

Considering the funds constraints with the SSI sector, the Government, he said, introduced the credit linked capital subsidy scheme for technology upgradation under which a 12 per cent back-ended capital subsidy would be admissible on the loans advanced albeit in certain select sectors.

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