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<ul><li>More than a month after the Indian government announced the MSME loans scheme, total loans disbursed under the scheme have crossed only 5% of the target.</li><li>Cautious approach by private banks could be one of the reasons behind the slow progress.</li><li>In the public sector, State Bank of India is leading the charge, having sanctioned more than ₹14,000 crore loans to MSME borrowers.</li></ul>Small businesses are not getting the loans they need to recover from the COVID-19 shock. According to <a href="https://twitter.com/Anurag_Office/status/1272845054898561027">data released</a> by the Ministry of Finance, public sector banks have sanctioned ₹32,050 crore loans and disbursed ₹16,031 crore, which is a little over 5% of the ₹3 lakh crore package announced by the government. Private banks are yet to play their part. <div type="image" title="Share of lenders across MSME segments" msid="76438221" hostid="261" caption="&amp;lt;p&amp;gt;Share of lenders across MSME segments&amp;lt;/p&amp;gt;"></div> As part of the coronavirus stimulus package, the Indian government announced an Emergency Credit Guarantee Line Scheme (ECLGS) to help micro, small and medium enterprises (MSME) emerge from the coronavirus crisis on May 13. Further, Finance Minister Nirmala Sitharaman had to convene a meeting on June 15 with the heads of major private banks to prod them to ensure effective roll out of the <a href="https://www.businessinsider.in/india/news/fm-nirmala-sitaraman-announces-six-steps-for-msme-sector/articleshow/75717258.cms">₹3 lakh crore ECLG scheme</a>. But, Business Insider, as well <a href="https://www.bloombergquint.com/business/government-guaranteed-msme-loan-program-runs-into-early-glitches">other reports</a>, found that suggest that private banks, like ICICI Bank, HDFC Bank, and Axis Bank to name a few, have not stepped up to task yet. The fact that <a href="https://economictimes.indiatimes.com/small-biz/sme-sector/only-30-to-40-msme-units-have-opened-for-work-in-unlock-phase-1-fismes-animesh-saxena/articleshow/76418627.cms">less than 40% of the MSMEs</a> have reopened their business since the economy started opening up on June 1 may also be a reflection of the same. <div type="twitter" handle="FinMinIndia" handlename="Ministry of Finance" image="http://pbs.twimg.com/profile_images/1135488202616102914/DkD8hlzI_normal.png" favoritecount="738" retweetcount="142" status="FM Smt. @nsitharaman chairing a meeting through VC with Major Pvt Banks &amp; NBFC to ensure effective roll out of ECLG… https://t.co/Hxxs7SeBMS" createdat="1592217837000" id="1272479954895163392"></div> <div type="Article" hostid="261" msid="76154606" title="Here’s how MSMEs can apply for loans from SBI, ICICI Bank and others" mstype="2" mssubtype="0"></div> Private banks are taking a cautious approach Some MSME borrowers told Business Insider that the private banks are taking a cautious approach for now. <div type="image" title="NPA rate across MSME segment" msid="76438269" hostid="261" caption="&amp;lt;p&amp;gt;NPA rate across MSME segment&amp;lt;/p&amp;gt;"></div> Some of the borrowers said their respective banks asked them to wait for a few more days before applying for the loan. “I was asked to come back next week to apply for the <keyword id="1524449" type="PERSON" weightage="20" keywordseo="MSME-loan">MSME loan</keyword>. The relationship manager told me that they’re awaiting instructions from their head office,” a enterprise owner in Hyderabad said on the condition of anonymity. Even for those who have an existing relationship with the banks, the formal procedure to disburse loans will take a few more days. Queries sent to leading private sector banks – HDFC Bank and Axis Bank⁠— for a comment on the status of the implementation of the scheme remain unanswered. An ICICI Bank spokesperson responded, saying, “ICICI Bank is participating in the Emergency Credit Line Guarantee (ECLG) scheme. We have executed the undertaking with National Credit Guarantee Trustee Company (NCGTC) to enrol as a Member Lending Institution (MLI) under the ECLG scheme.” ICICI Bank also said that it is reaching out to eligible customers via email and SMS. However, at the time of writing, none of the borrowers Business Insider spoke to have received any communication from the bank. The ICICI Bank spokesperson told us that the bank has sent out communication already - we have reached out to our sources to get an update on this. <div type="Article" hostid="261" msid="75717258" title="Finance Minister Nirmala Sitharaman announces six measures for the MSME sector" mstype="2" mssubtype="0"></div> Public sector banks pick up the pace, SBI leads the charge In contrast, public sector banks have picked up pace in sanctioning and disbursing loans under this scheme. <div type="image" title="Bank-wise SME segment lending" msid="76438247" hostid="261" caption="&amp;lt;p&amp;gt;Bank-wise SME segment lending&amp;lt;/p&amp;gt;"></div> State Bank of India, the largest bank in the country, is leading the charge – as of June 12, it had sanctioned ₹14,559 crore worth of loans, and ₹8,776 crore loans had already been disbursed. We reached out to credit officers in some of these public sector banks, who told us that they have already sent out communication to eligible MSME borrowers. While some of them accepted the ECLGS loan, several others had to be convinced by the officers. Since the government has fixed October 31 as the deadline for the execution of this scheme, credit officers are working to meet their targets. Private banks could pick up the pace in the coming weeks Branch managers at private banks blamed procedural delays and said that the pace would pick up in the coming weeks, depending on the interest shown by MSME borrowers. One of the reasons behind the slow uptake could be the lack of interest shown by MSME borrowers, who are either unsure about the survival of their business, or the extension of debt moratorium has eased liquidity. Confusion about the eligibility, and other conditions of the scheme could also be behind the slow uptake, <a href="https://www.bloombergquint.com/business/government-guaranteed-msme-loan-program-runs-into-early-glitches">according</a> to Vishal Kumar, co-founder of MSMEx which is an advisory firm for small businesses. At the time of writing, <a href="https://www.icicibank.com/business-banking/finance/emergency-credit-line.page?">ICICI Bank</a> and <a href="https://www.axisbank.com/business-banking/avail-msme-and-corporate-financing/general-information-policies/policy-on-lending-to-mses#menuTab">Axis Bank</a> had listed out the details of loans under ECLGS on their websites, while we were unable to confirm this for HDFC Bank. The eligibility, credit amount and interest rate for each MSME borrower will be decided based on their credit ratings. Security-backed loans attract lower interest rates when compared to government-guaranteed loans, according to the details mentioned on ICICI Bank’s <a href="https://www.icicibank.com/business-banking/finance/emergency-credit-line.page?">website</a>. Since banks are required to update the loan data every 15 days after registering under ECLGS, we should have a clearer picture in the next one or two weeks. SEE ALSO: <a href="https://www.businessinsider.in/business/news/how-to-apply-for-msme-loan/articleshow/76154606.cms">Here’s how MSMEs can apply for loans from SBI, ICICI Bank and others</a> <a href="https://www.businessinsider.in/india/news/fm-nirmala-sitaraman-announces-six-steps-for-msme-sector/articleshow/75717258.cms">Finance Minister Nirmala Sitharaman announces six measures for the MSME sector</a> <a href="https://www.businessinsider.in/stock-market/news/small-businesses-with-good-turnover-can-now-be-listed-and-the-indian-government-will-buy-the-shares/articleshow/76136857.cms">Small businesses with ‘good turnover’ looking to get listed on the stock market will have the Indian government will buying their shares</a>

Only 5% of the government’s MSME emergency loan package is disbursed after a month ⁠— private banks are sitting tight

<ul><li>Prime Minister <keyword id="6354477" type="PERSON" weightage="20" keywordseo="Narendra-Modi">Narendra Modi</keyword> eased the loan application process for micro, small and medium enterprises (MSMEs) by launching a ‘59-minute portal’ on Friday. </li><li>The digital initiative will allow the owners of MSMEs to get approval for a loan in less than an hour instead of the 20-25 days that it took earlier. </li><li>The pilot experiment of the project has already sanctioned 72,000 loan applications.</li></ul>Micro, small and medium enterprises (MSMEs) in India have been under pressure since demonetisation stagnated economic activity due to the sudden liquidity crunch followed by India’s indirect tax reform, when the Good and Services Tax (GST) was implemented. In order to energise businesses in this segment and provide the necessary capital, India’s Prime Minister, Narendra Modi, <a href="https://www.pscp.tv/w/1BdGYOlmQXDxX">unveiled</a> a digital platform which will prevent small enterprises from going through a lengthy procedure for credit requirements. The launch of the <a href="https://www.psbloansin59minutes.com/aboutUs">59-minute</a> portal to support small <keyword id="34606" type="DOMAIN" weightage="20" keywordseo="industries">industries</keyword> was a part of the Indian Government’s ‘<a href="https://www.pscp.tv/w/1BdGYOlmQXDxX">support and outreach initiative</a>’ for MSMEs. While addressing the programme, Modi <a href="https://www.bloombergquint.com/business/modi-government-portal-loans-msmes-59-minutes#gs.p04tWmU">claimed</a> that the project has already crossed its target of approving 72,000 loan applications in its pilot stage. As of now, loans worth ₹230 billion have been approved through the digital portal. 
 
 
 
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 The digital initiative will substitute the processing time of 20-25 days to just 59 minutes making it easy for owners of MSMEs to get there loans sanctioned without visiting banks. In fact, the users of 59-minute portal can apply for loan of upto ₹10 million and expect it to be dispersed in 7-8 working days after the in-Principle approval letter is issued. So, how do you get your loan approved? All the small enterprises which are registered under the GST policy are eligible for a loan by registering on the portal. Although, there is no fee for registration but ₹1,000 along with taxes are charged once the loan applicant finds a lender on the portal. <a href="https://www.livemint.com/Politics/cXSzAPcFJyyU5PZnSbn5PO/How-to-get-Rs-1-crore-MSME-loan-in-59-minutes-A-stepbyste.html">In order to apply</a> for a loan the applicant has to submit a six month bank statement, e-KYC documents, income tax returns for the past three years, GST ID, and business owner’s details. Small industries can avail a loan between ₹1 million to ₹10 million against an interest starting from 8%. Union Government has already asked Reserve Bank of India to relax the norm for weaker banks thereby allowing the MSMEs to resume borrowing from them but the 59-minute portal has been set up by the Small Industries Development Bank of India (SIDBI). The Government of India has been taking initiatives to protect MSMEs in India which went through cash-crunch issue due to demonetisation and taxation reforms.The outreach program is supposed to run for next 100 years aiming to cover each and every corner of India.

Indian MSMEs can now get a loan approved in just 59 minutes

The second wave of the COVID-19 pandemic has stopped in its tracks the green shoots of economic recovery that were visible. Simultaneously, it induced a triple crisis of disrupting the supply chain, demand, and workforce for India's fragile Micro, Small, and <keyword id="126907" type="COMPANY" weightage="20" keywordseo="Medium-Enterprises">Medium Enterprises</keyword> (<keyword id="6393272" type="UNKNOWN" weightage="20" keywordseo="MSMEs">MSMEs</keyword>), which are often cited as the backbone of the Indian Economy. While MSMEs were already finding it difficult to manage their cash flows including the rigorous lending criteria of banks and non-banking finance companies (NBFCs) with limited assets to use as collaterals, this disruption meant a double whammy of further delay in settling of their receivables as well as lenders becoming more risk averse. While the government and the Reserve Bank of India (RBI) announced a slew of measures, including the issuance of credit schemes and calling out financial institutions to adopt cash-flow-based lending, yet the transmission of these relief measures to a majority of MSMEs remains a challenge. This highlights that the crux of the problem is not the lack of schemes, rather the informal nature of MSMEs and lack of organised set of financial documents, which casts a unique challenge for lenders to assess the creditworthiness of these enterprises. Today, just 40% of the sector’s credit demand is met by formal credit. Add to that the information asymmetry between the data available for MSMEs vis-à-vis large and mid-sized corporates where the lenders’ tend to apply the same lens of existing credit-risk assessment processes to MSMEs to those applicable for larger corporates. This often multiplies the operating cost for lenders to serve MSMEs as compared to the return on their loans. Though this scenario and the increasing credit requirements of MSMEs point to a colossal credit gap of ₹ 30 lakh crore, it underscores the critical role financial technology (FinTech) companies and new-age lenders can play in supporting MSMEs to adapt to the changing reality and respond to the challenges. <cmsannotation type="cmsannotation" annotationid="Capitalising on creditworthiness" comment="subhead" text="Capitalising on creditworthiness">Capitalising on creditworthiness</cmsannotation> The marriage between technology and financial services provides digital lenders an opportunity to focus on making MSMEs profitable and creditworthy. Alternative sources of data, such as cash flow, utility bill payments, point-of-sale transaction records, and even information from e-accounting programs can help put in place a comprehensive model to assess MSMEs’ business health. Further, by incorporating Artificial Intelligence, Machine Learning, and analytics into these models, lenders can build a more accurate financial health model with a comprehensive credit risk profile to detect and mitigate fraud and NPA risks. <cmsannotation type="cmsannotation" annotationid="Unlocking cash flow and reducing days sales outstanding" comment="subhead" text="Unlocking cash flow and reducing days sales outstanding">Unlocking cash flow and reducing days sales outstanding</cmsannotation> In addition to simplifying the lending process, innovative technology leveraged by FinTechs can enable electronic invoice presentation, processing, and reconciliation that will also help in better credit monitoring. Considering that chasing late payments is a tiresome process that leads to locked up working capital, e-invoicing can help in significantly removing procedural delays resulting from manual processing of invoices. It also reduces the time required to make and receive payments, gives a real-time status of pending invoices, and helps release locked up cash flow. In addition, MSMEs can also leverage these e-invoices to avail loans instantly, as the process to verify the genuineness of invoices by lenders can be reduced significantly. <cmsannotation type="cmsannotation" annotationid="Financing through digital supply chain platforms" comment="subhead" text="Financing through digital supply chain platforms">Financing through digital supply chain platforms</cmsannotation> <keyword id="168300" type="COMPANY" weightage="20" keywordseo="digitalisation">Digitalisation</keyword> of supply chains has been a game-changer for MSMEs that has enabled faster liquidity for them. While banks continue to assess creditworthiness for collateral-based lending to MSMEs, new-age lending platforms can digitally evaluate transaction data through AI-driven credit models in near real-time and offer trade financing products and services contextualised to the parties involved in the trade. Some platforms allow integration of their products and services into banks’ MSME platforms, which can subsequently be offered to MSME customers through digital medium. While no one solution can bridge the existing credit gap for MSMEs, leveraging alternative financing tools, such as e-invoice financing, peer-to-peer lending, and TReDS can go a long way in addressing this issue and create an enabling environment for MSMEs. Further, with the COVID-19 pandemic continuing to disrupt economic activities worldwide, FinTechs, banks, and NBFCs will have to come together to build differentiated lending models to forge the right balance for financial stability and create solutions for the credit needs of MSMEs. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/sona-comstar-ipo-price-gmp-should-you-subscribe/articleshow/83505013.cms">Sona Comstar IPO worth ₹5,550 crore opens today – find out if this EV battery player has enough juice for a long ride</a> <a href="https://www.businessinsider.in/business/news/why-dodla-dairy-has-no-plans-to-expand-beyond-southern-india/articleshow/83503817.cms">Here’s why Dodla Dairy has no plans to expand beyond southern India for at least the next two years even with its IPO</a> <a href="https://www.businessinsider.in/stock-market/news/adani-group-under-sebi-scanner-on-market-manipulation/articleshow/83501698.cms">Gautam Adani loses over $7 billion in net worth after questions over the meteoric rise in group stocks</a>

Cash, capital and credit trickle down to small businesses at a frustratingly slow pace — tech can speed them up

New Delhi, Mar 28 () Industry body Nasscom has urged the government to suspend all deadlines, including for tax payment and return filing, until four weeks post lifting of the lockdown to provide relief to startups and SMEs.To contain the spread of COVID-19, the government has announced a 21-day nationwide lockdown starting March 26."The COVID-19 pandemic has caused high stress on startups, putting their continuity at risk. They are looking to government to provide support and relief..." Nasscom said in a statement.The industry body said startups are facing severe time loss and project delays due to the prevailing circumstances that has contributed to financial pressure on them."We request that the government consider rental subsidy for workspaces used by startups which are regulated/owned/managed by government agencies," it added.The body also requested for a "blanket suspension of all deadlines including tax payment deadlines and filing deadlines until at least four weeks post lifting of all city lockdown".These include relaxation of deadline to file Foreign Inward Remittance Certificate (FIRC), option to avail overdraft facility/interest free and equity convertible funding, waiver of fines/penalties for offences violations related to procedural matters, extension of due date for payment of advance tax, and waiver of restrictions for claiming an expense as a deduction under Section 40 of the IT Act.Nasscom suggested that payment of provident fund and gratuity deposits should be deferred for the duration of the lockdown, and provide an option to employees for a one-time PF opt-out option for the next financial year 2020-21 given that startups are unlikely to be able to provide any salary increments due to subdued business environment."In such a case, both the employee and employer contributions towards the PF may be transferred directly to the employee. This will result in an increase in the take home pay of the employees. This move will be beneficial for the employees in the lower salary bracket and would lead to a higher take home pay for a majority of the start-up workforce," it said.Nasscom also sought deferral of interest payment deadlines and relaxation of loan interest payments. Besides, it suggested that governments and PSUs be encouraged to procure Make-in-India software products, and incentives/sops for consumption of indigenous products.For MSMEs, Nasscom said interest and penalties should be waived for delayed payments of TDS and GST due for the month of March, April and May 2020 if such payment is made by June 30, 2020."The working capital of MSME businesses is already stressed and the pandemic has further aggravated the situation. As an immediate relief, all government departments (Centre/State)/PSUs/large corporations must be directed to release all pending payments/invoice receivables raised by the MSMEs within 15 working days," it added.The body recommended that separate credit lines be given to MSMEs for handling global recessions."To minimise the impact of the pandemic and ensure minimum disruption in supply chain, government must ensure adequate credit flow to the MSMEs (small and medium enterprises)," it noted.Therefore, it must be ensured that the existing Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is accelerated with the Turn Around Time (TAT) of issuance of funds by SIDBI reduced to 7 working days, it added. SR BALBAL

You Searched For "procedure of msme loan" and got 4 results

Only 5% of the government’s MSME emergency loan package is disbursed after a month ⁠— private banks are sitting tight

Rounak Jain

Indian MSMEs can now get a loan approved in just 59 minutes

BI India Bureau

Cash, capital and credit trickle down to small businesses at a frustratingly slow pace — tech can speed them up

Narayan ‘Naru’ Ramamoorthy

COVID-19: Nasscom urges govt to defer tax payment, return filing for startups, MSMEs

PTI

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