‘The resilience of MSMEs, their record of debt servicing are exemplary’

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: The current economy slow down has hit the medium, small and micro enterprises (MSME) sector most. Various authorities have taken a number of measures to support the productivity of micro, small and medium enterprises (MSME) RM Malla, chairman & managing director, Small Industries Development Bank Of India, (Sidbi), explains to FE’s Kumud Das about the current state of affairs in these segments.

How effective have been the some of the measures of by the Centre and Reserve Bank of India on MSMEs?

The government of India (GoI) and the Reserve Bank of India (RBI) have announced several measures and stimulus packages to meet the challenges of economic slowdown and to ensure speedy revival of the economy. Some of the measures announced by GoI were, additional plan expenditure, greater thrust on infrastructure, additional allocation in TUF Scheme, 2% interest subventions for exports and enhancement in ECGC guarantees. Directions were given to PSUs for ensuring prompt payment of bills of MSMEs and sectoral credit by PSBs was closely monitored on a fortnightly basis. A monitoring cell for taking up unresolved issues of MSMEs with banks was also set up jointly by the ministry of finance (MoF) and the ministry of MSME RBI also announced reduction in CRR, SLR as also repo and reverse repo rates. Various refinance and term repo facilities were offered and liquidity was enhanced by nearly Rs 5 lakh crore. Further, banks were advised to consider restructuring of MSME loans.

Extension was allowed in the period of pre-shipment and post-shipment rupee export credit. RBI also permitted second restructuring, reduction in provisioning requirements and extended exceptional and concessional treatment to the CRE exposures. A special refinance facility of Rs 7,000 crore was extended to Sidbi for on-lending to MSMEs through banks, SFCs and also directly.

Sidbi on its part, sanctioned an account of Rs 4,400 crore to public sector banks, with the condition that they would grant credit to the extent of double the amount (Rs 8,800 crore) to micro enterprises with a base date of September 30, 2008. Further, we sanctioned 15% ad-hoc assistance under direct credit and working capital to existing borrowers and additional 15% limit to all existing customers under the Receivables Finance Scheme. Loans for purchase of DG sets, restructuring of loan accounts, PLR reduction by 300 bps to 11%, etc were some of the major initiatives.