The Hindu Business Line : Credit flow to SMEs must be increased, say experts

Many such enterprises in the State are becoming sick due to the lack of a vibrant credit policy, Mr A.R.K. Rao, Director of the Small Industries Service Institute (SISI), told Business Line.

"There are 1.4 lakh micro enterprises in the State. Most of them are unable to access credit due to procedural hassles and lack of interest in many agencies associated with the SME sector," he added.

CREDIT DISBURSAL

According to State Credit Plan 2006-07, Rs 12,650 crore was disbursed against the target of Rs 13,000 crore at the end of March 2007.

"The figures are impressive but a major chunk of credit must have bypassed micro-enterprises, according to our information," said Mr K. Harischandra Prasad, Chairman, Banking, Insurance & Finance Committee of the Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI).

"There are no proper modalities in place to identify the ways and means to extend aid to micro-enterprises like rice mills and other industrial units. There should be more focus in the credit plans," he added.

However, according to Mr K. Ramakrishnan, Chairman and Managing Director of Andhra Bank and President of the State Level Banker's Committee (SLBC), the credit flow for all categories of SMEs was bright. The outstanding loans of the SME sector at the end of March 2007 were Rs 23,178 crore, while Rs 14,750 crore is projected during 2007-08 in the SLBC's Credit Plan for the State.

CLUSTERS IDENTIFIED

To facilitate deeper penetration of credit in SME sector, activity-wise clusters of industrial units/places has been indicated in the credit plan.

For instance, clusters of fan and fan components, drugs and pharmaceuticals, engineering, hand tools foundry in Hyderabad, automobile spares and food processing in Vijayawada, imitation jewellery in Machilipatnam, textile units in Kothuru in Mahaboobnagar district and crochet lace park in Narasapur have been identified.

At its 160th meeting held recently, the SLBC also requested banks to initiate necessary steps to increase credit to the tiny sector to bring it above the stipulated target of 60 per cent.

More Stories on : SSI | Credit Market | Andhra Pradesh

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page