HYDERABAD: Banks must extend financial support to Micro, Small and Medium Enterprises (MSME) which provide maximum employment in the State, said Finance Minister Etela Rajender.
Instead of giving huge loans to a single major industry, banks should lend small amounts to multiple individual firms, he suggested and felt this will ensure quick returns and equal distribution of capital.
The Finance Minister, who addressed the bankers and representatives of MSMEs at the Bankers’ Conclave at the Federation of Telangana and Andhra Pradesh Chambers of Commerce and Industry (FTAPCCI) here Saturday, said, “Centralised economy always leads to poverty, but decentralised economy will be more stable.”
Rajender explained that Telangana’s new industrial policy has special provisions for the development of small-scale industries. Telangana State Industrial Project Approval and Self Certification System (TSiPASS) has all the features to encourage the growth of MSMEs in the State, he added. He made the remarks after some FTAPCCI members highlighted their financial problems.
Shiv Kumar Rungta, president, FTAPCCI, said, “It may be surprising to know, but only 30 per cent of MSMEs in India have access to banks for financial assistance.”
A recent survey by the Associated Chambers of Commerce of India (ASOCHAM) found that 70 per cent of small industries still depend on private money lenders for capital, he said.
The members of MSMEs blamed complex regulations by banks for this inequality between major and small industries.
The bankers, however, presented a counter argument that most of the MSMEs are not aware of banking formalities to obtain loans.
“Many of the small industries don’t even know how to prepare a balance sheet,” pointed out Dr N Krishna Mohan, Principal Chief General Manager, Banking Ombudsman, Hyderabad.
He advised MSMEs to prepare better loan proposals for quick approvals. At the same time, he also admitted that banks should launch innovative financing methods in order to fund potential small-scale industries.