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February 29, 2000
Government committed to supporting SSIs
Finance Minister Yashwant Sinha, in his budget speech, said the government is committed to supporting small-scale industries through credit and technology.
The collateral security requirement is being dispensed with for loans up to Rs 500,000 to improve credit flow to SSI units. Earlier, the limit was Rs 100,000. The requirement of providing collateral security is considered a major bottleneck in the flow of bank credit to very small units.
The existing composite loan scheme of SIDBI and banks help small borrowers by providing working capital and term loans through a single window. To promote credit flow small borrowers the composite loan limit has been increased from Rs 500,000 to Rs one million. Sinha said that public sector banks are being asked to ensure that every district and SSI cluster within districts are served by at least one specialised SSI bank branch having ISO certification.
The finance minister said a new credit guarantee scheme for SSIs has been formulated and a provision of Rs one billion has been made in the budget. The scheme will be implemented through SIDBI and will cover loans up to Rs one million from the banking sector. The guarantee loans will be securitised and will be tradable in the secondary debt market. The project limit under SIDBI for the National Equity Fund Scheme has been raised from Rs 1.5 million to Rs 2.5 million. SIDBI's technology development modernisation fund scheme has been extended by another three years.
He said that Khadi and Village Industry Commission has played a vital role in generating large-scale employment in rural areas with low per capita investment. For intensifying market efforts, the KVIC will introduce a common brand name for its products and also set up a professionally-managed marketing company for domestic and export marketing, he said.
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