Just 4% enterprises in unorganised sector get institutional credit

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New Delhi, Nov 6 (UNI) The National Commission for Enterprises in the Unorganised Sector (NCEUS) today brought out the startling fact that just four per cent of the unorganised sector enterprises have access to institutional credit and has recommended the creation of a National Fund for extending credit to them.

''The fund would be a statutory body to be created through an act of Parliament,'' NCEUS Chairman Arjun Sengupta told a newsconference here.

The National Fund for the Unorganised Sector (NAFUS), which will have a paid up capital of Rs 1,000 crore, will serve both as a refinance and development institution along the lines of Small Industries Development Bank of India (SIDBI) and National Bank for Agriculture and Rural Development (NABARD).

The Commission submitted two reports to Prime Minister Manmohan Singh yesterday titled: "Financing of Enterprises in the Unorganised Sector'' and ''National Fund for the Unorganised Sector (NAFUS). It had earlier submitted two major reports on social security and conditions of work in the informal workers.

The following are the other key findings of the reports; (a) There are 58 million enterprises currently employing 104 million people in the non-farm unorganised sector; (b) Ninety four per cent of the micro-enterprises have an investment of less than Rs five lakhs; (c) At present these enterprises (of investment less than Rs five lakhs) get 2.2 per cent of Gross Bank credit; (d) Even this is piggy backed on government programmes like Rural Employment Guarantee Porgramme (REGP) and Prime Minister's Rozgar Yojana (PRMY) (e) Micro enterprises with an investment of Rs 25 lakh get only five per cent of the credit advanced to the Non-Farm unorgansed sector sector enterprises; (f) The total Gross Bank Credit rose 16 times between 1991 and 2006, that is, from Rs 1,16,301 crore to Rs 18,41,978 crore. Of this, the share of SSI sector fell from 15.42 per cent to 6.34 per cent. Micro enterprises are part of the SSI sector and are a priority sector as far as the mandatory lending programmes of banks are concerned; The gainers has been other sectors such as housing finance with an investment of Rs 25 lakhs; (g) Nearly 50 per cent of the unorganised sector enterprises are located in the urban areas and the rest in the rural areas. However, 80 per cent of the capital deployed is in enterprises located in the urban areas and the remaining in the rural areas; (g) Despite the RBI guidelines to extend credit to micro-enterprises up to Rs five lakhs without collaterals, commercial banks are not willing to do so. Only 26 per cent of the micro-enterprises have got credit without collaterals.

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