Nirmala Sitharaman To Pitch For A Relook At SME Funding

Minister of State for Commerce and Industry Nirmala Sitharaman, while calling for lower interest rates to increase competitiveness of Indian industries,  expressed her concern over the fund crunch faced by small and medium enterprises (SMEs) in the country. She was speaking at the Idea Exchange programme of The India Express.

The minister said that she will take up the issue of bank funding to SMEs with the finance ministry as she wants the lenders to look at SME funding afresh.

“I will discuss the issue of funding with the finance ministry so that banks look at SME funding afresh because SMEs’ requirement of cash flows, investment and expansion capacities spring from a completely different understanding of business,” said Sitharaman.

Besides interest rates, Sitharaman said there are other SME-related concerns such as cash requirement, timely payments, issues with exporters and the fact that the announced benefits don’t reach them, need monitoring. A look into the monthly credit deployment data of the Reserve Bank of India shows that the SMEs witnessed a contraction in credit growth between March and June 2016. For June, while the credit growth for the medium sized industries contracted by 9.5 per cent, the micro and small industries saw their credit growth contract by 3.8 per cent.

Minister of State for Commerce and Industry Nirmala Sitharaman, while calling for lower interest rates to increase competitiveness of Indian industries,  expressed her concern over the fund crunch faced by small and medium enterprises (SMEs) in the country. She was speaking at the Idea Exchange programme of The India Express. The minister said that she will take up the issue of bank funding to SMEs with the finance ministry as she wants the lenders to look at SME funding afresh. “I will discuss the issue of funding with the finance ministry so that banks look at SME funding afresh because SMEs’ requirement of cash flows, investment and expansion capacities spring from a completely different understanding of business,” said Sitharaman. Besides interest rates, Sitharaman said there are other SME-related concerns such as cash requirement, timely payments, issues with exporters and the fact that the announced benefits don’t reach them, need monitoring. A look into the monthly credit deployment data of the Reserve Bank of India shows that the SMEs witnessed a contraction in credit growth between March and June 2016. For June, while the credit growth for the medium sized industries contracted by 9.5 per cent, the micro and small industries saw their credit growth contract by 3.8 per cent.