The Hindu Business Line : SIDBI, Nabard credit arrangement is `cosmetic tinkering'

The mere fact that SIDBI and Nabard have agreed to evolve a viable credit dispensation arrangement to provide resource support to NBFCs catering to the needs of the SME sector and agri-related activities is "cosmetic tinkering", according to Mr DE. Ramakrishnan, President, Industrial and Financial Reconstruction Association for Small and Tiny Enterprises.

In a reaction to the Annual Policy Statement of the Reserve Bank of India, Mr Ramakrishnan observed that a number of SSI units faced financial exclusion, which problem has "not been addressed adequately". The flow of credit to industry as a whole showed only a modest increase of 15.6 per cent in 2005-06 from 11.3 per cent a year ago.

In contrast, in April - January 2005, credit to the services sector rose 36 per cent, accounting for 63 per cent of incremental non-food credit, he noted. Similarly, retail credit expanded at rates ranging between 22-41 per cent since 2001-02 and accounted for 26.7 per cent of the incremental non-food credit in 2005-06. It is pertinent to note that the share of advances to `individuals' increased from about 10 per cent of total bank credit in March 2002 to nearly 25 per cent in January 2006.

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