The Indian banking sector is struggling with the nightmare of NPAs. On such backdrop, the government as well as banks are pushing to fund the neglected MSME segment to boost growth through MUDRA loans.
Chairwomen of State Bank of India, Mrs Arundhati Bhattacharya expressed her concerns for the MSME sector. She said the poorly funded micro, small and medium enterprises (MSMEs) need equity to survive.
Speaking at women’s entrepreneurs convention on Women’s day, Arundhati Bhattacharya said, “One of the biggest problems our SMEs face is that they have no equity. This is what our MSMEs lacks. They need the strength of equity or capital in their business and that is very low in India.” Currently, about 55 percent of SBI’s balance sheet comprises retail and MSME segment.
“Nearly, 45 percent is [devoted] to large corporates. I have no problem at all if I am able to tilt that more in favour of retail; I would love to do that,” the SBI chief said. While the banking sector is reeling under stress in its corporate loan book, banks and the government are keen to fund the neglected MSME segment in order to boost growth through MUDRA loans. These loans range from Rs 50,000 to Rs 10 lakh. Kalraj Mishra, Minister of MSME, who was also present at the event, said banks must lend to the sector as it is the largest employment generating sector and the growth engine of the economy.
While admitting that government was providing support through SIDBI, he said, efforts are being taken to prevent MSME units from turning sick. The government’s action plan includes revival and rehabilitation facilities and setting up of corrective action committees. These can help small traders, businessman and even vegetable sellers, he maintained. He added that women have been majority beneficiaries of many measures.
Addressing the majority women entrepreneurs in the audience, the SBI Chairman said, “The large sector also needs support from the bank. But that does not mean that we (banks) are not there for you (retail segment).” Currently, SBI has an outstanding Rs 1,60,000 crore lent to the MSME sector. “This is year alone we have done more than Rs 10,000 crore. We wish to do around Rs 16,000 crore of mudra loans by the end of this year,” the SBI chief said. Mishra added banks must further lend towards helping SC (scheduled class) and ST (scheduled tribes) segment