Rajeev Chandrasekhar's official website - Member of Parliament

GOVERNMENT OF INDIA

Ministry Of Finance

DEPARTMENT OF FINANCIAL SERVICES

RAJYA SABHA
UNSTARRED QUESTION NO. 51
TO BE ANSWERED ON 23rd FEBRUARY, 2010/4 PHALGUNA 1931 (SAKA)
Lack of Access to Funds by MSEs

 

51. SHRI RAJEEV CHANDRASEKHAR:
Will the Minister of FINANCE be pleased to state:
(a)     whether most of the Micro and Small Enterprises (MSEs) lack access to any formal funds and are forced to rely on costly informal credit:
(b)     whether the organized lending sector does not find micro and small enterprises creditworthy and the overseas investors also lack interest in funding them; and
(c)     If so, whether Government would consider putting in place regional stock exchanges from where such units can raise capital easily from local investors?

ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI NAMO NARAIN MEENA)

(a)    & (b): The Credit flow to the Micro and Small Enterprises (MSEs) has increased over a period of time. The flow of credit from Scheduled commercial Banks to the Micro and Small Enterprises (MSE) during the last 3 years is given below:

(Amt Rs. In Crore)

As on last reporting Friday of March

Public Sector Banks

Private Sector Banks

Foreign Banks

Scheduled Commercial Banks

2007

102550

13136

11637

127323

2008

151137

46912

15489

 

213538

2009

191307

47916

18138

257361

The above statement reflects that Commercial Banks are increasingly lending to this sector. As regards overseas investors not having interest in funding MSME, no such complaint I grievance has come to the notice of Government.

(c): In November 2008, Stock Exchange Board of India (SEBI) came out with the "framework for recognition and supervision" of stock exchanges platforms of stock exchanges for SMEs", As per the guidelines, dedicated exchanges for SMEs could be set up after obtaining due recognition under the Securities Contracts (Regulation) Act ¬(SCRA). The framework, inter-aha, provides for the SME exchanges to be set up i) as new corporatized entities with minimum capital of Rs 100 crore or H) as a separate platform in existing exchanges. It also provides the other eligibility criterion and comments on trading

Further, SEBI has released guidelines in respect of the SME platform, approved by Its board. The guidelines, inter-alia includes the eligibility criterion for listed companies, compulsory market making mechanism and reporting guidelines.