BENGALURU: Finance minister Nirmala Sitharaman on Saturday increased the lending target for public sector banks in lending to micro, small and medium enterprises (MSME) the current financial year by nearly 35%, while assuring that no small business will be denied access to funding.
“I want to set a new target… I want to add Rs 1.5 crore lakh crore and bring your overall target to Rs 5.7 lakh crore so that credit reaches MSMEs this year itself,” she said at an event with bankers and MSMEs in Bengaluru.
And, FM is keen that banks maintain the momentum, setting a target of Rs 6.1 lakh crore for the next fiscal and Rs 7 lakh crore by FY27. “I shall be visiting MSME clusters and each time I visit, I would like a report from the banks as to how much they have progressed.”
Govt had been setting ambitious target for farm lending, which have been met in the past.
The minister said that the current loan book estimate of Rs 4.2 lakh crore for FY25 was “okay but not enough,” given public sector banks’ dominant presence as well as resilience in the overall banking ecosystem.
“PSBs should take the lead in lending to MSMEs, and target greater growth. They should take far more initiative… I’m told that PSBs are set to lend Rs 4.2 lakh crore if everything was business as usual based on their performance the last two years,” she added.
Sitharaman explained that outstanding loans for public sector banks towards MSMEs has shown a growth of 9.2% over the last two financial years, but private banks have shown 25% and non-banking financial companies (NBFC) 39% instead.
Sitharaman was speaking at the National MSME Cluster Programme organised by Small Industries Development Bank of India (Sidbi) at Indian Institute of Science in Bengaluru. Among those present at the event physically and virtually were managing directors of several banks such as the State Bank of India, Canara Bank and Union Bank as well as MSME owners.
During the pandemic, there was not a single MSME that went untouched by the country’s banks to help with their credit requirements, she added. “Calls and messages were received by each of them, as per Prime Minister Modi’s orders, our banks had reached out.”
Separately, the union minister said that the Rs 100 crore credit guarantee scheme for MSMEs announced during the Feb budget this year would be soon placed before the cabinet for approval.