In its bid to prevent concentration of bank credit only to large industries and a handful of borrowers, the Reserve Bank of India (RBI) has introduced the concept of priority sector and directed banks to lend a minimum of 40 per cent of net bank credit to this sector, which includes Micro, Small and Medium Enterprises (MSMEs)

The RBI on Friday conducted a town hall meeting with prospective entrepreneurs here on the facilities offered by banks for launching the enterprises.

The meeting attracted participation from over 300 entrepreneurs and several representatives from the MSMEs in and around Mysuru. Top officials from various banks, including the State Bank of Mysore (SBM) and the State Bank of India (SBI), and representatives from various government institutions attended.

The objective behind the meeting was to attract new and prospective entrepreneurs to launch MSMEs and educate them on banking facilities such as credit and interest rates for the MSMEs. Banks grant capital subsidy and interest concession on loans.

Eugene E. Karthak, Regional Director, RBI, Bengaluru, inaugurated the meeting and interacted with the participants. He also distributed loan letters to entrepreneurs. SBM, SBI, Corporation Bank, Karnataka Bank, Vijaya Bank, Indian Overseas Bank, Syndicate Bank, Central Bank of India, and Cauvery Grameen Bank had granted loans to entrepreneurs.

A release said MSMEs are the backbone of the Indian economy and they contribute about 8 per cent to the GDP besides 45 per cent of the industrial output and 40 per cent of total exports from the country.

It has given employment to around 10 crore people, next only to agriculture. Micro and small enterprises offer a lot of scope for women empowerment, entrepreneur development and balanced regional development. Just like agriculture, MSMEs are also excluded from formal institutional finance. Around 92 per cent of MSMEs are excluded from assistance from banks and they depend on informal sources such as moneylenders. Most of the micro units are excluded from bank finance, the release said.

Speaking to The Hindu , Lead Bank Manager K.N. Shivalingaiah said the meeting was organised to educate the entrepreneurs on the opportunities and services available to them from the banks.

Despite several facilities, the MSMEs had not taken off as expected. The RBI was thus making efforts to promote the sector and attract more entrepreneurs to make use of the banking services, he said.

Image Courtesy: The Hindu