RBI’s Chakrabarty against major sops for MSMEs

Reserve Bank of India deputy governor K C Chakrabarty today said the micro, small and medium enterprises (MSME) sector should form an integral part of policies aimed at achieving inclusive growth. Apart from providing employment opportunities, the MSME sector plays a significant role in keeping the spirit of enterprise alive, he said.

Releasing the 'India micro small and medium enterprises report 2010', brought out by Institute of Small Enterprises and Development, in Kochi, Chakrabarty said almost every village in the country has MSME units, but credit facilities offered by banks are available only in 35,000 villages. More than five lakh villages remain out of the purview of the amenity.

At the same time, he discouraged such enterprises from seek concessional credit. ''What weaker people require is adequate and timely credit and not cheap credit. We are not in favour of subsidisng the poor,'' he said. ''MSMEs should not to ask for concessional credit and units which are unviable and not creditworthy should not be given credit.''

Banking business should be done at an affordable price and banks should be allowed to do business at appropriate rate of interest, he said.

'We will focus on rehabilitation of MSMEs. During a global meltdown, some units will fail. From RBI there is no policy gap. There are shortcomings in implementation and we have to collectively bridge this gap,'' he said.

Adequate and timely credit is of utmost importance. The RBI's vision is to provide banking services to all the villages in the country by 2015, he said.