Public-sector banks have sufficient cash liquidity and measures are being taken to release that due payments to micro, small and medium enterprises (MSME) sector by large corporates prior to Diwali, said Union Finance Minister.
Further, if MSMEs require any term loans, this will be considered at in the second phase of the centre’s outreach programme starting next week.
The minister’s remarks come in response to the economic slowdown followed by liquidity crunch faced by the Indian businesses, especially MSMEs. This resulted in the fall of economic growth rate falling to a six-year-low of 5 percent in the June quarter.
Inflated credit disbursal by banks is aimed at assisting small businesses boost operations and create jobs.
After the review meeting on Monday with heads of public-sector banks (PSBs), Sitharaman said that banks have been directed to offer bill discounting facility to MSMEs against payments due from large corporates.
As per the returns filed by large corporates, as much as Rs 40,000 crore is due to the MSME sectors, Sitharaman said.
“Big corporates have reported to the MCA (ministry of corporate affairs) in the regular returns that they owe Rs 40,000 crore to the MSMEs. The banks agreed that since they suffer the most from shortage of cash during these camps, they will reach out to all these MSMEs to do the bill discounting,” finance and banking secretary Rajiv Kumar said.