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<ul><li>Business Insider launched its <keyword id="6358354" type="UNKNOWN" weightage="20" keywordseo="MSME">MSME</keyword> Exchange’s 2021 edition on Monday, highlighting the issues faced by <keyword id="3658" type="LOCATION" weightage="20" keywordseo="India">India</keyword>’s MSMEs. </li><li><keyword id="20154" type="PERSON" weightage="20" keywordseo="tamil-nadu">Tamil Nadu</keyword>’s finance minister <keyword id="11350217" type="UNKNOWN" weightage="20" keywordseo="Palanivel-Thiaga-Rajan">Palanivel Thiaga Rajan</keyword> highlighted that the problem lies with the conversion from intent to output. </li><li>Meanwhile, Edelweiss’ Madhavi Arora and <keyword id="66841" type="COMPANY" weightage="20" keywordseo="Indian-Bank">Indian Bank</keyword>’s Kishor Kharat raised issues with risk aversion.</li></ul>The Indian micro, small and medium enterprises (MSMEs) continue to face capital crunch, despite the union government’s push towards their financial inclusivity. Several politicians, business leaders, bankers and investors joined the <keyword id="11530646" type="UNKNOWN" weightage="20" keywordseo="business-insider-msme-exchange">Business Insider MSME Exchange</keyword> on day one of its two day event ‘<a href="https://vconfex.com/site/msme-exchange-2021/1125">MSME Exchange 2021</a>’ to discuss the major challenges hampering the credit availability to this segment that employs millions of people. Tamil Nadu’s finance minister Palanivel Thiaga Rajan, popularly known as PTR, has highlighted that there is<a href="https://www.businessinsider.in/finance/news/how-to-apply-for-msme-loan-online/articleshow/79835121.cms"> no lack of intent</a> in the Indian systems, but the problem lies with the conversion of intent into outcomes. “When I went back to the meeting we had with the bankers last week, in the course of the meeting it became apparent to me that not everything that the <keyword id="30067" type="ORGANIZATION" weightage="20" keywordseo="RBI">RBI</keyword> [Reserve Bank of India] intended in their statements was truly understood by the bankers. They didn’t know what all schemes could be done and they had questions for the RBI. RBI promised them a training session, clarification session and modifications of the announced programmes based on the feedback of the <keyword id="6368751" type="UNKNOWN" weightage="20" keywordseo="banks">banks</keyword>. That should not have waited for a finance minister of the state to convene a meeting, instead there should be better linkages between the regulators and the banks,” PTR said. With this, he highlighted some of the structural challenges within the Indian system to support the MSMEs. He added that the bankers, after all, are humans and for them restructuring a ₹1,000 crore loan is much simpler than hundred ₹10 crore loans or thousand ₹1 crore loans. Besides this, the kind of support given to large businesses, corporations and high profile businesses has shadowed the support to the Indian MSMEs. He also cited bureaucratic design, regulatory processes and technical integration as some of the major challenges in the system. “You put all of this together, then I would say, some of it is structural in the way India works and the rest is unique to the times we live in,” PTR added. Risk aversion leads to less credit availability to MSME The credit availability for the MSME segment continues to be stressed, with nearly 50.7 million enterprises facing the lack of access to traditional lending challenges. This represents about 80% of the total 63.4 million MSMEs in India, a report by the Association of Chartered Certified Accountants <a href="https://www.newindianexpress.com/business/2021/jun/02/507-million-msmesin-india-have-no-access-to-formal-creditacca-report-2310642.html">added</a>. There was about 6.5% growth in bank credit last year between January to March 2020. However, the loan growth in the MSME segment or small businesses grew only by 1.1%. So even though data shows about 6.7% growth in MSME lending in 2021, it has really come off from a low baseline. “Right optic is basically a multiplier to the economy. The kind of primary monitor that has been generating over the past two years or so, hasn't really percolated beyond the banking segment. This sort of reflects the fact that you know there is a major risk aversion in the economy, which I believe policymakers have tried to essentially address to some extent, especially given the fact that they've given you know a lot of loan guarantees to the final segment,” Madhavi Arora, lead economist at Edelweiss Securities, said during a panel discussion. Kishor Kharat, former managing director of Indian Bank and principal partner at Amro Bucons, also agreed with this school of thought. He added that India is witnessing decelerating credit growth and therefore its credit-deposit ratio has also reduced by almost 9%-10%. “Obviously, these are not good signs, but then this pandemic has really created certain issues... Yes obviously risk aversion is there, but then you look at the banking scenario today the financials of all banking industries all put together. They're going under tremendous stress, particularly, right from the asset quality review which was started during then [RBI] governor <keyword id="6358908" type="PERSON" weightage="20" keywordseo="raghuram-rajan">Raghuram Rajan</keyword>. This gave way to non-banking financial companies (<keyword id="6355260" type="COMPANY" weightage="20" keywordseo="NBFC">NBFC</keyword>) into the banking system,” Kharat added.

India’s banks still shy away from lending to small businesses -- Business Insider’s MSME Exchange panelists debate the reasons

MSME Exchange 2021: The long and short of it

Chennai, Aug 13 (PTI) The ruling DMK on Friday presented its first budget after coming to power, months after it swept the April 6 Assembly elections, with the opposition AIADMK boycotting the financial exercise. AIADMK, Tamil Nadu's main opposition, staged a walkout from the Assembly, boycotting the first budget presentation by Finance Minister Palanivel Thiaga Rajan. As soon as Speaker Appavu gave tips to MLAs on accessing budget document on their computer, leader of opposition, K Palaniswami began reading out from a prepared text and sought an opportunity to covey his views. While opposition MLAs stood up, requesting the Speaker to give Palaniswami an opportunity, Appavu said they can convey their views on Monday during general discussion and asked them to sit down. However, Palaniswami continued to read out from the statement, and after he completed it, AIADMK members, led by him, walked out of the House. However, AIADMK's allies--BJP and PMK, stayed put. This is the first budget, also the first paperless one, of the DMK government after it assumed power in May after a 10-year stint in opposition. PTI VGN SA SS SS

DMK presents paperless budget, AIADMK boycotts

There is a growing view that global central banks perpetuating a kind of ‘inequality’ ⁠— and it may be happening in India too

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India’s banks still shy away from lending to small businesses -- Business Insider’s MSME Exchange panelists debate the reasons

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MSME Exchange 2021: The long and short of it

Business Insider India

DMK presents paperless budget, AIADMK boycotts

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There is a growing view that global central banks perpetuating a kind of ‘inequality’ ⁠— and it may be happening in India too

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