The loans to small business sector may double to Rs one lakh crore in the current fiscal, Finance Minister Arun Jaitley said on Friday.
Jaitley also expressed concern over low participation of the private banks in the government-promoted schemes, especially the recently launched social security programmes.
Since the small and micro business sector has diverse needs, credit products should be customised to suit their requirements so that the unfunded are effectively funded, Jaitley said during his meeting with PSU Bank heads in New Delhi.
The Minister said that 2015-16 should see a doubling of the loans to the small business sector from Rs 50,000 crore (during 2014-15) to Rs one lakh crore in the current fiscal.
He also discussed the progress and development MUDRA Bank and the Pradhan Mantri Mudra Yojana (PMMY) operationalised to help unfunded to get fund.
Officials from the Department of Financial Services (DFS) updated the Finance Minister on the subsequent steps taken in this regard following the setting up of MUDRA Bank.
In April, Prime Minister Narendra Modi launched Micro Units Development and Refinance Agency (MUDRA) which will provide credit of up to Rs 10 lakh to small entrepreneurs and act as a regulator for 'Micro-Finance Institutions' (MFIs).
MUDRA focuses on the 5.75 crore self-employed who use funds of Rs 11 lakh crore and provide jobs to 12 crore people.
There are about 5.77 crore small business units. The Finance Minister also expressed concern over the modest growth of domestic credit of 7 per cent over the previous year registered by the Public Sector Banks (PSBs) and took stock of the sectoral profile of the total domestic credit flow of Rs 49.01 lakh crore during 2014-15. The agricultural credit grew by 17.33 per cent over the previous year, which came as a silver lining.
He asked the bankers to achieve the target of 20 per cent growth in educational loan assets and also attempt to even out the huge regional disparity in such loans.
The Minister said the housing sector has seen a good growth rate of 1618 per cent and advised the public sector banks to achieve a 30 per cent growth in priority sector housing loans, which are intrinsically secure loans and which are required to provide a stimulus to overall growth.
During his discussion with CEOs of 6 private sector banks, the Finance Minister expressed his concern over the low participation of private banks in the government-promoted schemes, especially the three social security schemes where private bank participation is only 4 per cent.
He said national priorities need to be common to private banks as well as they benefit from the same framework as their public sector peers.
Top officials of ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, Yes Bank and IndusInd Bank attended a separate nearly-one-hour-long meeting with the Finance Minister.