INCREASE IN QUANTUM OF ADVANCES TO SMALL SCALE INDUSTRIES

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RAJYA SABHA

The advances to Small Scale Industrial (SSI) Sector from Public Sector Banks during last year have increased from Rs. 49,743 crore to Rs. 52,988 crore at the end of March, 2003. However, the share of credit to SSI sector in the Net Bank Credit has declined from 12.5% in March, 2002 to 11.1% in March, 2003.

Government took up the issue of improving credit flow to SSI sector with Reserve Bank of India (RBI) through its Standing Advisory Committee to Review the Flow of Institutional Credit to SSI sector. Based on the recommendations of the Standing Advisory Committee, Government has taken various new important decisions relating to credit facilities to SSI Sector. Some of the decisions are as under:-

(i) As per the announcement made by the Finance Minister in the Union Budget 2003-04, the Indian Banks’ Association has advised the banks to adopt the interest rate band of 2% above and below their prime lending rates for secured advances.

(ii) Banks have agreed to enhance composite loan limit from Rs. 25 lakhs to Rs. 50 lakhs for the SSIs.

(iii) Ministry of SSI has identified 60 clusters for focused development of SSIs. The list of 60 clusters was sent by the Ministry of SSI to the RBI. RBI in turn has written to the commercial banks to formulate credit plans by incorporating SSIs’ credit requirement in the States Credit Plans.

(iv) Credit Guarantee Trust Fund for Small Industries to review its decisions in respect of loans upto Rs. 5 lakhs.

This information was given by Shri Tapan Sikdar, Minister of State for Small Scale Industries and Development of North Eastern Region in a written reply to a question by Smt. N.P. Durga in Rajya Sabha today.