Bengaluru: Finance Minister Nirmala Sitharaman on Saturday increased the lending target for public sector banks to micro, small and medium enterprises (MSMEs) by around 35% in the current fiscal year, while ensuring that no small company will have access to financing. You will be denied access.
“I want to set a new target…I want to add Rs 1.5 lakh crore and take the overall target to Rs 5.7 lakh crore so that MSME credit reaches the same level,” he said at an event with bankers and MSMEs in Bengaluru. It can last a year.”
And the Finance Minister wants banks to maintain this momentum, setting a target of Rs 6.1 lakh crore for the next financial year and Rs 7 lakh crore for FY27. “I will visit MSME groups and every time I go “I would like to receive a report from the banks on the progress they have made.”
The government was setting ambitious targets for agricultural credit, which were met before.
The minister said the current loan portfolio estimate of Rs 4.2 lakh crore for FY25 is “okay but not enough”, given the dominant presence of public sector banks as well as resilience of the banking ecosystem in general.
He said, “PSBs should play a leading role in lending to MSMEs and aim for greater growth. They should take more initiative… I am told that based on their performance in the last two years, PSBs are willing to lend Rs 4.2 lakh crore if everything remains normal.”
Sitharaman pointed out that public sector banks’ outstanding loans to MSMEs have seen a growth of 9.2% in the last two financial years, but private banks have shown a growth of 25% and non-banking financial companies (NBFCs ) have shown a growth of 39%.
Sitharaman was speaking at the National MSME Cluster event organized by the Small Industries Development Bank of India (SIDBI) at the Indian Institute of Science in Bengaluru. Physical and virtual attendees at the event included CEOs and MSME owners of various banks including State Bank of India, Canara Bank and Union Bank.
He said that during the pandemic there was not a single MSME that remained untouched by the country’s banks to help them with their credit requirements. “As per PM Modi’s order, the calls and messages received from each of them reached our banks.” Separately, the Union Minister said that the Rs 100 crore credit guarantee scheme for MSMEs announced during the February budget this year will soon be presented before the Cabinet for approval.
