The Reserve Bank of India (RBI) has directed public sector banks to increase the flow of credit to the cash-strapped micro, small and medium enterprises (MSMEs) and also restructure their accounts in a time-bound manner.

RBI has also asked banks to provide enough of money to the large scale corporates so that they can further extend time payments to the MSMEs.

Indian Banks' Association Chief Executive K Ramakrishnan said, "Owing to the credit crunch, big corporates are delaying payments to small firms for their inventories. This issue came up in the discussion today."

All the information was displayed on an MSME Advisory meeting held on February 3rd between the RBI Deputy Governor Usha Thorat and PSU banks chiefs.

The chiefs that attended the meeting were Punjab National Bank Chairman K C Chakrabarty, Union Bank of India CMD M V Nair and Indian Overseas Bank CMD S A Bhatt. Moreover Secretary to the Ministry of Small and Medium Enterprises, Dinesh Rai also attended the meeting.

Besides in a meeting between the bankers and finance minister, Pranab Mukherjee it was said that the credit tightening in the private sector raises public sector banks' responsibility to meet the credit needs of the economy so that growth is not adversely affected.