branches, 69, 374 business correspondents and 2, 332 other modes like rural atms, mobile vans etc. the expanded banking coverage is envisaged to provide greater access to msmes operating in hitherto unbanked areas to avail of financial services. further, based on the recommendations of the working group ( chairman : shri v. k. sharma, executive director, rbi ) constituted by the reserve bank of india to review the credit guarantee scheme ( cgs ) of the credit guarantee fund trust for micro and small enterprises ( cgtmse ), the limit for collateral free loans to the mses has been increased from the level of rs. 5 lakh to rs. 10 lakh and has been made mandatory for banks. the working group has also made recommendations regarding increase in the extent of guarantee cover, absorption of guarantee fees for the collateral free loans by cgtmse subject to certain conditions, simplification of procedure for filing claims with cgtmse and increasing awareness about the scheme. cgtmse, which is the implementing agency for credit guarantee scheme, has been advised to expedite implementation of the recommendations. the implementation should result in enhanced usage of the guarantee scheme and facilitate increase in quality and quantity of credit to mses, leading, eventually, to sustainable and inclusive growth. timely detection of sickness is critical for any enterprise as any delay in this regard impinges on the revival prospects of sick, but potentially viable, units. in order to speed up the process for identification of a unit as sick, a proposal for modifying the extant definition of sickness, in line with the recommendations of the working group on rehabilitation of sick smes set up by reserve bank of india, is under consideration of the government of india and the reserve bank of india. all scheduled commercial banks have also been advised to review and put in place mse loan policy, restructuring / rehabilitation policy and non - discretionary one time settlement scheme for recovery of non - performing loans, duly approved by their board of directors. banks were advised in december 2009 to give wide publicity to the non - discretionary one time settlement scheme by placing it on their bank ’ s web - site and through other possible modes of dissemination. to address the complaints received from various industry associations / chambers that banks are not acknowledging their loan applications, all banks have been mandated to acknowledge all loan applications, submitted manually or online, by their msme borrowers and ensure that a running serial number is recorded on the

5, 242 billion as against rs. 4, 785 billion in march 2011 and rs. 3, 623 billion in march 2010. credit to mses has, as a percentage of the adjusted net bank credit of public sector banks, increased from 9. 5 % in 2005 to 14. 8 % in 2011. ( source : msme annual report 2011 – 12 ) banks ’ concerns in lending to msmes there are concerns that banks face while lending to smaller enterprises. credit information about a small enterprise is not as easily available, as it is for a larger firm, and it is not cost effective for the lender to collect information on all small enterprises. nor have the small enterprises adequate collaterals to offer. the lenders, therefore, either refrain from lending or load the cost of information asymmetry into the lending rates. another important factor is that risk assessment of smaller enterprises requires a separate set of tool as against the conventional tools, the absence of which is likely to dissuade banks from such lending. further, smaller enterprises, in many instances, revolve around a single entrepreneur – key man – and lack good succession planning which discourages creditors to lend to such enterprises. iv. policy initiatives recognizing the important role played by msmes in economic development and their sizeable contribution to employment and gdp, and realizing that financial access is critical for msmes ’ growth and development, government and reserve bank of india have undertaken a lot of supporting initiatives. let me very briefly touch upon a few of them. bis central bankers ’ speeches with an objective of ensuring provision of banking services in all parts of the country, banks were advised to draw up a roadmap to provide banking services through a banking outlet in every unbanked village having a population of over 2, 000 by march 2012. the reserve bank advised banks that such banking services need not necessarily be extended through a brick and mortar branch but could be provided also through business correspondents with the aid of any of the various forms of information and communication technology ( ict ) – based models. a total of 74, 414 such unbanked villages have been identified and allotted to various banks through state level bankers committees ( slbcs ). as at the end of march 2012, as reported by the state level bankers ’ committees of various states / union territories, banking outlets have been opened in 74, 199 ( 97. 7 per cent ) villages across the various states in the country. this comprises of 2, 493