New Delhi: The Centre’s policy to improve the battered condition of the Micro, Small and Medium Enterprises (MSME) has failed to derive the desired results as the public sectors banks are reluctant to disburse loans to them.

The task force constituted by the Prime Minister’s Office (PMO) has asked the banks to increase the loans to the MSME by 20 percent per year.

According to the Reserve Bank of India (RBI), 60 percent of total loans to the MSME should be disbursed to the micro enterprises in the next fiscal.

Last year, 50 percent of the total loads were finalized for the micro enterprises. It has been extended to 55 percent for the current fiscal and will be further increased to 60 percent in the financial year 2012-12.

Replying to a question in the Lok Sabha, Union Minister of state for Finance Namo Narain Meena said, “22 banks including SBI have achieved the target for giving loans to the MSME in the last fiscal. But they could not keep the same pace for micro enterprises.”

According to the RBI sources, only 10 banks have achieved the 55% loan target to the micro sector in the current fiscal.

Micro Enterprises have production capacity of Rs 25 lakh, while capacity of Small Enterprises  are more than Rs 25 lakh but does not exceed five crore rupees. Similarly, Medium Enterprises have capacity of more than Rs 5 crore but does not exceed ten crore rupees.