He has also ensured increased credit flow to the SSI sector from the banking system. "The SSI sector makes a valuable contribution of about 40 per cent to our total manufacturing sector production, 35 per cent to exports and employs over 160 lakh workers. Our commitment to the SSI sector is total," asserted the minister. He also addressed the problem of inspector raj and lack of credit to the tiny sector. In order to increase credit flow to SSIs, working capital limit is being doubled to Rs 4 crore from Rs 2 crore now.

The working capital limit of SSIs was determined by banks on the basis of a simple calculation of 20 per cent of their annual turnover. To moderate the cost of credit to SSIs, RBI will advise the banks to accord units with a good track record, thebenefit of lower spreads over the prime lending rate.

Enhanced powers would be delegated to bank managers of specialised SSI branches to ensure that most credit proposals are decided at the branch level.

At present, Small Industrial Development Bank of India (SIDBI) is a subisidiary of IDBI and IDBI is the major shareholder in State Finance Corporations (SFCs). To equip SIDBI to play its apex role in SSI credit provision more effectively, SIDBI will be delinked from IDBI and IDBI shareholding in SFCs will be transferred to SIDBI.