Bankers should shed conservatism in credit to entrepreneurs:FM

Bangalore, Jun 16 (PTI) Finance Minister P. Chidambaram
Monday asked bankers to shed their "conservative" attitude
towards lending to entrepreneurs as he announced a commitment
to pump in nearly Rs 1,000 crore additional fund to an
initiative to promote the micro, small and medium enterprises
sector.

He said bankers are extremely conservative at taking risk
and lending to such enterprises, adding, there is a need for
changing the scenario.

He was speaking at a function here, where he released the
100,000th credit guarantee approval by Credit Guarantee Fund
Trust For Micro & Small Enterprises (C.G.T.M.S.E.), which was
set up by the Government of India and Small Industries
Development Bank of India (S.I.D.B.I.).

Chidambaram said a "quite and unnoticed" revolution is
under way in this sector, where not all young men and women of
India prefer to take jobs instead they are willing to become
entrepreneurs.

He noted that 40 percent of India's exports are accounted
for by this sector which is growing at a "furious pace".

During his visits to various parts of India, he has come
across complaints by young men and women, who have highlighted
lack of credit for their enterprises.

The Minister said bankers should take note of the
"radical change in the mindset of the young India" and must
adapt to meet the demands of a "rising India".

"For every entrepreneur willing to take risk, there must
be a banker at the other side of the table willing to take
risk (in lending and credit)", Chidambaram stressed.

He also said: "We have provided a corpus of Rs 1,584
crore for C.G.T.M.S.E. so far. Government of India's share is
Rs 1,257 crore. We are committed to increasing this corpus to
Rs 2,500 crore, and as and when C.G.T.M.S.E. requires
additional capital, we are willing to provide this corpus
immediately".

Chidambaram suggested to C.G.T.M.S.E. to come out with
another 50,000 credit approvals by March end.

He noted that of the total one lakh credit approvals till
date, as many as 63,000 of them had taken a loan of up to Rs
one lakh (only) and 85,000 others up to a loan of Rs five
lakh.

The Minister said the average size of the loan needs to
go up substantially.

He suggested that by March-end, the average size of the
loan should go up to Rs five lakh (from the current level of
Rs one lakh), and over a period of three years, it should go
up to Rs ten lakh.