New Delhi: In a bid to shield the industrial sector from further slowdown, the Central government through emergency measures has decided to enable easy and adequate amount of bank loans to the industrial units. Though the government has failed to provide them any relief from the escalating interest rates, it has however tried to offer this breather to the industrial sector.

In a letter written to public banks, the Finance Ministry has instructed them to take quick decisions on all applications regarding loans. The banks in small cities and districts have been directed to emphasize on easy industrial loans to the traders. The banks have been asked to approach the district level Banking Coordination Committee comprising members of major banks and administration for the purpose. The government has asked the banks to provide immediate loan to a company or a person if recommended by the committee.

According to sources, easy loans by banks will be a big relief for the small and medium industrial units as it will contribute in boosting the industrial production.

The government is worried over the scenario that with economic slowdown strengthening its feet in India, job layoffs and unemployment can be on the rise in small industrial units. Hence, the government has tried to maintain smooth functioning of the units to curb the hovering trouble.

It is to be noted, the growth rate of factories has been on a continuous decline since last few months. While industrial output has registered a 5.1 percent decline in October this year, the banks have also pulled themselves back from providing loans to the industrial units.

On the other hand, the high interest rates have discouraged the industrial sector to apply for loans. Also, with rise in non-performing assets (NPA), the banks are also practising extra care in providing loans. Hence, this timely initiative was the need of the hour in infusing new life into the struggling industrial units.

Loans provided to industrial sectors and their growth in October, 20011

Industrial loan (in crores)      Oct 2011(%                Oct 2010 (%)
Infrastructure (5,74,569)                  21.7                                44.3
Electricity (3,02,036)                         29.8                                46.5
Telecom (92,542)                             -4.9                                 89.9
Petrochemicals (13,856)                     4.2                                  49.5
Cement (33,273)                                14                                   36.1
Leather industry (7,453)                      10.4                                 15.1
Tea (2,337)                                        -4.9                                  19.6