Canara Bank today said it has signed a MoU with industry body CII to facilitate cheaper credit access to micro, small and medium enterprises.
Under the MoU, Canara Bank shall extend a concessional credit of 50 basis points on the applicable card rate of interest to MSME units which are members of CII.
Besides, rebate of 50 per cent in the processing or upfront fee will also be given to the unit owners, Canara Bank Executive Director P S Rawat told reporters here.
The MoU was signed by R Madhusudan General Manager (MSME wing) on behalf of Canara Bank and Raman Saluja, Chairman Regional Committee on MSMEs, CII (Northern region).
Stating that the bank would focus on lending to MSME sector, Rawat said Canara bank is targeting over 24 per cent growth in advances to micro, small and medium enterprises with lending of Rs 50,000 crore in 2013-14 as against financing of Rs 37,000 crore in last fiscal.
“We will focus on providing credit to MSME sector. In 2013-14, a sum of 50,000 crore will be advanced to MSME sector,” he said.
However, in last fiscal, bank registered a growth of 11 per cent in advances to MSME.
Canara Bank has launched two lending schemes MSE ‘Pragati’ and MSE ‘Unnati’ under which the bank is financing to MSME sector without any collateral security on third party guarantee.
A report released by CII in collaboration with Resurgent India on ‘Financing for Growth’ during the event today also highlighted the problems being faced by the MSME sector in getting adequate and timely finance from banks.
The report noted that only 25 per cent of total funding in case of MSME sector comes from banks and financial institutions, while rest is arranged from other sources, including internal accruals and friends.
“MSMEs have a very high demand for finance, a large part of which is not met, particularly to finance their growth.
There is a total financial requirement of Rs 32.50 lakh crore in MSME sector comprising Rs 26 lakh crore of debt demand,” said the report.