Free MSEs from money lenders: FM asks Banks

Written by Agencies | Mumbai, May 31: | Updated: May 31 2008, 19:23pm hrs
Making a strong case for freeing micro and small enterprises from the clutches of private money lenders, Finance Minister P Chidambaram reminded the banks that they are duty-bound to lend to the sector.

"It is the duty of banks to help and nurse these micro and small enterprises...MSEs are entirely dependent on unscrupulous money lenders who charge huge interest rates," he said releasing the Code of Banks' Committment to MSEs.

"We have made significant progress as far as agriculture sector is concerned, in education, loans to industry and in the last few years to SMEs through SHGs (self-help groups).

But I do not feel that we have yet been able to reach credit to micro and small entreprises," he said.

He said MSEs were more vulnerable than low paid employees who hold regular jobs.

"In business you can't be certain that every day will be the same as previous or every day will bring the same kind of rewards or returns," Chidambaram said.

"Undoubtedly, credit is the most important part of the lifeline of the economy. Absence of credit means there is hardly any room of opportunity for growth, not to speak of sustainable growth," the Finance Minister said, adding that it was in times of uncertainties MSEs needed resilience to tide over the difficult phase.

In a developing country, micro and small enterprises will continue play to an important part for many many years to come, he said.