The Hindu Business Line : Policy statement on credit to SMEs soon, says Chidambaram

THE Finance Minister, Mr P. Chidambaram, intends to make a detailed policy statement on credit to the small and medium enterprises (SMEs) sector later this month.

"The statement would set out the policy guidelines and parameters for substantially increasing the flow of credit to SMEs," Mr Chidambaram told newspersons after a meeting with the chiefs of public sector banks here on Friday.

He said credit to SMEs sector would be taken as a thrust area in the current year. In June last year, the Finance Minister had come up with a detailed policy statement on farm credit.

Asked about the financial package for revitalisation of sugar industry, he said the package was discussed at the meeting.

"The National Bank for Agriculture and Rural Development (Nabard) has told me that discussions are at an advanced stage. Twenty-six sugar mills do not require any rehabilitation package. About 61 mills are in one-to-one discussions and these are to be custom-made packages. They are confident that the discussions would be concluded by the end of the month," Mr Chidambaram said.

The Finance Minister had in his Budget speech for 2005-06 proposed a financial package for the revitalisation of the sugar industry.

As part of the financial package, he had announced that sugar factories that were operational in 2002-03 sugar season would be assisted to restructure. He had said Nabard, in consultation with State Governments, the RBI, banks and financial institutions would work out a scheme for providing a financial package with a moratorium of two years, on both principal and interest, and a schedule of payment having regard to the commercial viability of each unit.

Mr Chidambaram had also announced reduction in the rate of interest on outstanding loans as on October 21, 2004 to two percentage points below the bank rate. Further, the Finance Minister had said the Indian Banks' Association and Nabard would be asked to work out a scheme under which individual sugar factories may renegotiate the rate of interest on their past high-interest loans.

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