New Delhi, June 27: Finance minister Pranab Mukherjee will meet chief ministers, administrators of the central and Western states & union territories and public sector banks’ chiefs in Mumbai on Monday to discuss strategies to achieve government’s credit offtake target on agriculture, education, micro-and small-enterprises segments.
According to the ministry of finance, Mukherjee wants all PSBs to take steps to achieve agriculture credit flow target of Rs 3,75,000 crore, amounting to a 15% increase over last year in the current fiscal.
The Reserve Bank of India (RBI) has advised all the scheduled commercial banks that they should achieve a 20% growth in credit year-on-year to micro and small enterprises and strictly adhere to the allocation of 60% to micro enterprises to ensure enhanced credit flow. Data on credit to the micro sector by public sector banks during the last two years reveals non-achievement of the 60% target in this regard, according to a statement sent to RBI and all PSBs.
The high-level task force on MSME sector constituted by the Prime Minister has recommended that all scheduled commercial banks (SCBs) should target 20% y-o-y growth in credit to MSMEs with 60% thereof being provided to Micro Enterprises, it stated.
However, it is observed that the growth in MSE lending by banks for the last two years had been around 29% and share of micro enterprises had been 45%. As it would be difficult to increase the share of micro enterprise loans in the MSE lending to 60% this year itself, it has been decided with the approval of finance minister that it should be done in stages viz.50% in the year 2010-11, 55% in the year 2011-12 and 60% in 2012-13.
Similarly, the annual growth in the number of micro enterprise accounts may be, for the present, fixed at 10% instead of 15% as recommended by the High Level Task Force.
On agriculture credit, the Union Territories of Daman & Diu and Dadra & Nagar Haveli has shown negative growth during 2009-10 over previous year. The states of Madhya Pradesh, Rajasthan, Gujarat and Goa have shown growth of above 25% in this segment. However, states of Chhattisgarh (104%) and Maharashtra (76%) have registered a remarkable growth in agriculture credit during 2009-10. On SME credit, Chhattisgarh has shown a negative growth when compared to the other states like states of Rajasthan and Gujarat which have registered more than 50% growth during 2009-10.
Along with Maharashtra chief minister Ashok Chavan, chief ministers of Madhya Pradesh, Rajasthan, Chhattisgarh, Dadra & Nagar Haveli and Goa have confirmed their participation. Gujarat chief minister Narendra Modi,however, will give it a miss. Deputy finance minister of Gujarat will represent the state in Modi’s absence. All the heads of state-owned banks, top officials RBI, Nabard, Sidbi, National Housing Bank(NHB) and IIFCL are likely attend finance minister’s review meeting.
———Agencies