Banks May Be Made Answerable For Denying Loans To MSMEs, Says Union Minister
Customers wait to exchange Indian five hundred and one thousand rupee banknotes at a Syndicate Bank branch in Dadri, Uttar Pradesh, India. (Photographer: Anindito Mukherjee/Bloomberg)

Banks May Be Made Answerable For Denying Loans To MSMEs, Says Union Minister

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Banks might be made answerable in future for refusing loans to eligible Micro, Small and Medium Enterprises players, Union Minister Pratap Chandra Sarangi said.

The Minister of State for MSME stated that the development of the sector is often hampered due to non-cooperation of banks and his ministry was in talks with the finance ministry to address the issue.

Sarangi noted that the MSME sector creates maximum jobs at the local level and with the lowest capital. Due to less burden on the government and low investment, the risk for banks lending to them is also low, he said.

“After agriculture, MSME is the second largest sector with employment opportunities,” he said. However, the development of this sector is often hampered due to non-cooperation by bankers, he added.

“The Centre, in collaboration with the finance ministry, is now finding a solution to this issue. In future, banks might be made answerable if they refuse loans to eligible candidates.” Uttar Pradesh Chief Minister Yogi Adityanath said that around 14 lakh youths got jobs in MSMEs in the state in the last two-and-a half years.

“MSMEs will play a significant role in making India a $5-trillion economy. Around 14 lakh youth got jobs in the last 2.5 years because of MSMEs, as envisioned by Prime Minister Narendra Modi,” he said.

On account of its biggest manpower, the economy of Uttar Pradesh and that of the nation complement each other. MSME is the growth engine of the state, he said.

“MSMEs have a rich tradition in Uttar Pradesh. But due to lack of promotion and changes required according to market conditions, this tradition started waning. In order to revive the sector, last year during the UP Diwas the state government had announced One District One Product scheme,” he said.

The chief minister said his government not only provided training to people associated with the sector but also provided them loans through various schemes.

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