SFCs advised to consider new approaches to SME finance
The finance minister, P Chidambaram told press at the Andhra Pradesh State Financial Corporation (APSFC) that State finance corporations (SFCs) should consider new approaches for extending finance to small- and medium-sized enterprises (SME’s). He said this should incorporate working closely with public sector banks in extending loans to the SMEs sector. Chidambaram said that institutional lending to SMEs accounts for just 5 per cent of the GDP contrasted with over 50 per cent in the US, Europe and other developed countries. “The government has targeted to take the loan ratio to SMEs to 25 per cent from the existing 5 per cent in the next five years,” Chidambaram said. Lower credit flow to the SME sector is seen as the underlying reason for slow economic growth, compared to more mature markets.
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