The Confederation of Indian Industry-southern region (CII-SR) and UN Industrial Development Organisation (UNIDO) signed an agreement in Chennai on Wednesday to promote credit schemes for micro and small and medium enterprises (SMEs).

The SMEs in auto components, leather and footwear industries would get bank loans without collateral security under the mutual credit guarantee scheme (MCGS).

UNIDO has also opened an investment and technology promotion office (ITPO) on Wednesday at CII-SR headquarters, Chennai to promote foreign direct investment in the SME sector.

Addressing a seminar organised by CII-SR and UNIDO on "Mutual Credit Guarantee Schemes - The Italian Experience - Growth through Cooperation", Alejandro Vera, advisor of UNIDO's office, said the core objective of the SME initiatives was to promote business through partnerships.

He said micro enterprises and SMEs can form a mutual credit guarantee agency (MCGA), which will in turn provide guarantee for bank loans availed, by its members.

UNIDO is partnering with Unionfidi, an Italian mutual credit guarantee agency, to replicate Italy's success in mutual credit guarantee schemes in India.

Explaining the Italian experience, Unionfidi General Manager Giorgio Guarena said that the relationship between SMEs and the banks has to be strengthened to remove difficulties for industries to access credits.