On Friday, US regulators urged major banks of the country to continue lending to small businesses which are credit-worthy, a move which seems to be a direct result of the severe and bitter criticism from Capitol Hill and the White House that the aggressive post-crisis approach taken by regulators is cutting off credit.

In a joint statement, the Federal Reserve, Federal Deposit Insurance Corp. and other state and federal regulators stressed that they were highly concerned about the shrinking in lending to small sized businesses as banks respond to the monetary crisis by tightening their lending standards.

Also, the regulators asserted that they are working towards ensuring that "supervisory policies and actions do not inadvertently curtail the availability of credit to sound small-business borrowers".

During the past year, the number of banks that had gone ahead to tighten credit standards for small companies had managed to hit the highest level in 20 long year, as was revealed by the Fed's senior-loan-officer opinion survey.