Banks in Orissa asked to complete loan target set for MSMEs
By Vaibhav Aggarwal
Jan 5, 2009
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The banks extending services in the state of Orissa have been pushed by the finance minister of the state to accomplish the loan target set for the micro, small and medium enterprises (MSME).

The banks are asked to complete their aim set for the current fiscal and for this purpose they were requested to inflate their lending under Credit Linked Capital Subsidy Scheme (CLCSS) for technical up gradation of MSMEs. Meanwhile they are also requested to clear all the pending loan proposals linked to MSME.

Further the Khadi and Village Industries Board (KVIB) was also asked to re-examine the targets assigned to different banks. This request was made because low targets were set for the co-operative banks in the Pradhanmantri Employment Guarantee Programme (PMEGP).

The decision to request banks to fulfill their loan target for MSME has been taken at the 116th State Level Bankers' Committee (SLBC) meeting. In the meeting, the finance minister of Government of Orissa, Prafulla Chandra Ghadai asked banks to make sure that Micro-Finance Institutions (MFIs) offer loans to the rural poor at rational interest rates.

Until September 2008, 11.8% of the net bank credit in Orissa was given to MSMEs and this figure states that there is ample of scope for increasing the lending to this sector. The credit-deposit (C-D) ratio in the state has also been declining and had come down to 69.12% at the end of September 2008 from 77.91%, a year ago. The C-D ratio for some banks is very low as compared to the national average, said the finance minister.

The banks with C-D ratio below the national average include Allahabad Bank, Canara Bank, IDBI Bank, Punjab National Bank, State Bank of Hyderabad, State Bank of Meysore, United Bank of India, Federal Bank, Axis Bank, HDFC Bank, IndusInd Bank among others.

Chairman of SLBC, who is also Chairman and Managing Director of UCO Bank, S K Goel said that there are sufficient prospects in Orissa for lending beyond the mineral sector. Above the SME segment in the state constitute to be the second largest employer and therefore it needs proper attention.

He also recommended banks to extend adequate and timely credit for the SMEs as well as enhance lending to the clusters.

Regional Director of RBI, Kaza Sudhakar said that the banks should aim to reach out to the large section of the unbanked population.

Sudhakar informed that 55% of the SME loans in the state were extended by the largest lender, Sate Bank of India (SBI).


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