to 1996 3. 63 4. 09 9. 04 2. 85 3. 20 1997 to 2001 1. 99 3. 17 7. 75 1. 57 1. 75 1991 to 1996 2. 00 2. 78 3. 57 1. 16 1. 74 1997 to 2001 0. 09 1. 40 2. 07 0. 13 0. 69 1991 to 1996 7. 50 7. 21 3. 16 5. 99 7. 35 1997 to 2001 4. 79 5. 85 6. 74 3. 82 4. 31 1991 to 1996 3. 71 5. 78 7. 74 4. 97 8. 17 1997 to 2001 3. 22 4. 65 6. 98 3. 44 - 0. 20 1991 to 1996 na na - 2. 09 12. 32 11. 61 1997 to 2001 na na 6. 28 0. 23 7. 93 1991 to 1996 3. 43 na 6. 57 10. 52 5. 41 1997 to 2001 3. 40 5. 87 7. 62 5. 08 6. 14 1991 to 1996 na na 5. 11 25. 04 - 1. 63 1997 to 2001 na na 4. 13 12. 29 4. 52 country / period average united states united kingdom germany japan korea thailand china india hungary source : international financial statistics, november 2002. understandably, there are certain rigidities in the overall interest rate structure in the economy that constrain banks from reducing their lending rates. these have been well documented in the earlier monetary and credit policy statements of the rbi. subsequently, interest rates on small savings have also moved down and there is a commitment from the government to link these rates with market related rates. the recovery environment has also improved. a related issue pertains to transparency in lending rates. especially after the introduction of sub - plr lending by banks, the spreads between the minimum and maximum lending rates seem to have widened. the rbi is making efforts to publish on its website bank - wise information on the minimum and maximum lending rates. our own internal exercises reveal that the concept of plr may need to be reviewed in the current context. perhaps, bank economists may like to study the international experience and come out with suggestions. lending to small and medium enterprises the problem arising out of high lending rates gets accentuated due to segmentation in the credit market. the large corporates are able to negotiate fine rates with banks and are able to bring down their overall interest costs. in addition, the large corporates have the option of access

k c chakrabarty : bank credit to micro, small and medium enterprises ( msmes ) – present status and way forward address by dr k c chakrabarty, deputy governor of the reserve bank of india, at the formal release of the india micro, small and medium enterprises report 2010 of the institute of small enterprises and development ( ised ), kochi, 21 may 2010. assistance provided by smt l vadera in preparation of this address is gratefully acknowledged. * * * 1. dr p m mathew, director, ised, dr k n kabra, chairman, ised, shri t o sooraj, director, industries and commerce, government of kerala, dr yerram raju, senior fellow, ised, senior bankers, msme entrepreneurs, other distinguished guests, ladies and gentlemen. i am indeed very happy to be in your midst today for the release of the 13th issue of the india, micro, small and medium enterprises report series of your institute. the msmes, given their limitations and constraints need professional support, to analyze their own environment, articulate their needs and understand the impact of policies that get shaped there from. i am glad that the institute is endeavouring to provide this support. 2. in a nation ’ s economy, it ’ s the small and micro enterprises which play a vital role. for, they not only give employment to a large number of unskilled and semi - skilled people but also support bigger industries by supplying raw material, basic goods, finished parts and components, etc. the critical role and place of the msme sector in the indian economy in employment generation, exports and economic empowerment of a vast section of the population is well known. there are about 2. 6 crore enterprises in this sector. the sector accounts for 45 per cent of the manufactured output and 8 per cent of the gross domestic product ( gdp ). msmes contributed close to 40 per cent of all exports from the country and employ nearly 6 crore people which is next only to the agricultural sector. msme is the best vehicle for inclusive growth, to create local demand and consumption. msmes cater to niche markets. the msmes of yesterday are the large corporates of today and could be mncs of tomorrow. thus the banks and other agencies should take pride while servicing the msmes as they are playing an instrumental role in the formation of mncs of tomorrow. 3. it was, therefore, only appropriate that the government of india enacted the