60 pc of MSME loans to provide for micro units

MUMBAI: The Reserve Bank of India has directed banks to provide 60 percent of the total loans extended to MSMEs to micro units.

"We want to encourage more and more micro units to come up in the country. Thus, we have made it mandatory for all banks to provide 60 percent credit, out of the total loans extended to MSMEs (micro, small and medium enterprises), to micro units," RBI Chief General Manager Amarendra Sahoo told.

Sahoo said that the RBI has also increased the limit of collateral-free loans for MSMEs from Rs 5 lakh to Rs 10 lakh. "The base rate module imposed by the RBI will enable an increase in credit flow to small borrowers at reasonable rates, thus encouraging MSMEs," he said.

Union Minister of State (Independent Charge) for MSMEs Dinsha Patel said that the government would extend full support for encouraging such enterprises in the country.

"Prime Minister Manmohan Singh has said that the GDP is likely to grow by 8 per cent. This can be achieved only if more and more small-scale industries, which generate employment, come up. The government is ready to provide all necessary assistance to such enterprises," Patel said.