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<keyword id="175632" type="UNKNOWN" weightage="20" keywordseo="MSME-sector">MSME sector</keyword> is one of the most neglected sectors with respect to public policy but has immense potential. It is because MSMEs are the backbone of any industrial economy. Across the world, most transformations have happened on the back of robust industrial sector, and MSMEs have played a critical role in these transformations. 
 In India, the <keyword id="6395867" type="UNKNOWN" weightage="20" keywordseo="manufacturing-sector">manufacturing sector</keyword> has been lagged behind and the government has envisaged an ambitious '<keyword id="6354869" type="UNKNOWN" weightage="20" keywordseo="make-in-India">Make in India</keyword>' program to give the sector a boost. The 'Make in India' program cannot do well without the MSME sector overall doing well because the sector, at present, provides employment roughly to one in 15 people in India and is responsible for roughly 45 per cent of India's exports. Despite all this, the sector remains highly troubled. 
 
It is because there are several unique problems that the sector faces in India. Most of these emanate from the fact that roughly 95 percent of enterprises in the sector are still unregistered. It means these enterprises are outside the ambit of formal schemes and programs of the government. 
 
For this, the government recently launched the Udyog Aadhar Scheme, which aims to register unregistered enterprises and bring them with the ambit of schemes and policies of the government. It is a major initiative and may help enterprises become part of the formal system. 
 
The second issue is that the unorganized nature of the sector results in the lack of marketing support at the national and international level and lack of integration in the global value chains. It has resulted in restriction of goods and services to only local markets that results in loss of revenue to the people employed in the value chain of the overall network. A collaborative approach between the stakeholders of the MSME ecosystem can help in improving quality as well as give an access to markets for a large number of MSME enterprises. 
 
The third major issue is the feeling of trust between an agglomeration of firms/enterprises and even between a firm and the government. 
 
Firms feel that the government is taking information from them to get taxes or harass them rather than to build a database for helping the enterprises achieve their true potential. It is even seen in the last year's national innovation survey that saw a large amount of enterprises talking about government as a major barrier to innovation. 
 
Also, another major problem is with respect to labour laws in the sector, which makes the firms perceive the government as a problem rather than as a helper/collaborator. The inhibition of trust has hampered and continues to hamper the growth of the MSME sector and the Indian economy. 
 
Fourth is the issue of credit flow to the sector. The RBI has adopted the recommendations of the PM's task force on MSMEs in 2010 and continues to use it for schemes to benefit MSME sector, but the implementation of these by banks and benefits to the individual firms are seen as major challenges that are seen on the ground. 
 
Fifth issue is innovation in the MSME sector. India's overall approach to innovation in MSMEs has been built around the idea that technology and R&amp;D are innovation. While technology and R&amp;D can be used to support or result in innovation, they are not innovation. Similarly, some government institutions and MSME sector are misaligned. It is because government CSIR labs produce technologies and R&amp;D that is very rarely taken up by the MSME sector. It makes R&amp;D and innovation in MSME's quite antithetical. 
 
Finally, there are several institutions at the innovation level in the country that are simply defunct. These include institutions like the National Innovation Council and the National Manufacturing Competitiveness Council (NMCC) that are without the head of institutions at present. These should see appointments at the earliest or should be completely dismantled. 
 
Over the next few decades a critical factor in making India competitive will be making MSMEs competitive. It will happen only when the government and firms resolve some of the issues mentioned here. A process driven and systematic approach to bridging the trust deficit will help MSME become more competitive. 
 
(The article is co-authored with Sankalp Sharma, Senior Researcher at the Institute for Competitiveness, India. Amit Kapoor is Chair, Institute for Competitiveness &amp; Editor of Thinkers. The views expressed are personal. Amit can be reached at <a href="mailto:amit.kapoor@competitiveness.in">amit.kapoor@competitiveness.in</a> and tweets @kautiliya)

Here’s why the MSME sector is lagging behind

New Delhi, Feb 26 () The Centre has decided to include non-scheduled urban and district central cooperative banks in three big ticket schemes to facilitate access to finance for the MSME sector. These schemes include the credit guarantee fund trust for micro and small enterprises, credit linked capital subsidy scheme and interest subvention. The initiative is expected to expand the outreach of the schemes considerably which in turn shall help address the crucial requirement of access to finance of the MSME sector. "The NBFCs have about 13 per cent share in MSME lending, and extend hassle-free credit to MSME sector, especially in the remote areas. The inclusion of NBFCs, scheduled and non-scheduled urban cooperative banks and district central cooperative banks in these schemes will spread the outreach and easy access of credit," Union MSME Minister Nitin Gadkari told . He said the step will also create uniformity and competitiveness across lenders in the financial sector, as the borrower will have the option to choose the lender in accordance with their convenience and approach. "These schemes have been serving the sector but there was a need to take them to next level. Therefore, the ministry has decided to include the non-scheduled urban cooperative banks and district central cooperative banks in the the credit guarantee fund trust for micro and small enterprises; credit linked capital subsidy scheme; and interest subvention scheme," Gadkari said. RSN MKJ

Govt to include non-scheduled urban, district co-op banks in 3 schemes for MSMEs

New Delhi, Jun 22 () The finance ministry on Monday said banks have sanctioned over Rs 75,000 crore loans so far under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector reeling under stress due to the coronavirus-induced lockdown. However, loans worth Rs 32,894.86 crore are disbursed under the 100 per cent ECLGS for the micro, small and medium enterprises (MSMEs), starting June 1. The scheme is the biggest fiscal component of the Rs 20-lakh crore Aatmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman last month. "The total amount sanctioned under the 100% Emergency Credit Line Guarantee Scheme by #PSBs and private banks stands at Rs 75,426.39 crore, of which Rs 32,894.86 crore has already been disbursed," Sitharaman said in a tweet. The latest number released by the Finance Minitry comprises all 12 public sector banks (PSBs) and 16 private sector banks. "Under the 100% ECLGS, the loan amounts sanctioned by Public Sector Banks increased to Rs 42,739.12 crore, of which Rs 22,197.54 crore has been disbursed," she said in another tweet. Meanwhile, private sector banks sanctioned Rs 32,687.27 crore while disbursed Rs 10,697.33 crore so far. It is to be noted that the RBI on Sunday said lending institutions should assign zero per cent risk weight on the credit facilities extended under the ECLGS to MSME borrowers. On May 21, the Cabinet had approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25 per cent through ECLGS for the MSME sector. Under the scheme, 100 per cent guarantee coverage will be provided by National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs 3 lakh crore to eligible MSMEs and interested Micro Units Development and Refinance Agency (MUDRA) borrowers, in the form of a guaranteed emergency credit line (GECL) facility. For this purpose, a corpus of Rs 41,600 crore was provided by the government, spread over the current and next three financial years. The scheme will be applicable to all loans sanctioned under GECL facility during the period from the date of announcement of the scheme to October 31 or till an amount of Rs 3 lakh crore is sanctioned under GECL, whichever is earlier. The main objective of the scheme is to provide an incentive to member lending institutions to increase access and enable availability of additional funding facility to MSME borrowers, in view of the economic distress caused by the COVID-19 crisis, by giving them 100 per cent guarantee for any losses suffered by them due to non-repayment of the GECL funding by borrowers. All MSME borrower accounts with an outstanding credit of up to Rs 25 crore as on February 29, which were less than or equal to 60 days past due as on that date, i.e., regular, SMA-0 and SMA-1 accounts, and with an annual turnover of up to Rs 100 crore, would be eligible for GECL funding under the scheme. DP MKJ

Banks sanction over Rs 75,000-cr loans to MSMEs under credit guarantee scheme

New Delhi, Jun 15 () Finance Minister Nirmala Sitharaman on Monday held a meeting with the heads of major private sector banks, and asked them to ensure effective rollout of Rs 3-lakh crore ECLGS for the MSME sector, hit hard by coronavirus-induced lockdown. The meeting -- also attended by CEOs of major non-banking financial companies (NBFCs) -- on Emergency Credit Line Guarantee Scheme (ECLGS) was held through a video conference. The Finance Minister chaired a meeting through video conference with major private banks and NBFCs to ensure effective roll out of ECLGS and uninterrupted/ smooth liquidity to Indian MSMEs in this difficult time. Debasish Panda, Secretary, Department of Financial Services, was also present in the meeting, the finance ministry said in a tweet. As of June 11, public sector banks have sanctioned loans worth Rs 29,490.81 crore under the 100 per cent Emergency Credit Line Guarantee Scheme. Out of this Rs 14,690.84 crore has already been disbursed. The scheme is the biggest fiscal component of the Rs 20-lakh crore Self-Reliant India Mission package announced by Sitharaman last month. On May 21, the Cabinet had approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25 per cent through ECLGS for the MSME sector. Under the scheme, 100 per cent guarantee coverage are being provided by National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs 3 lakh crore to eligible MSMEs and interested Micro Units Development and Refinance Agency (MUDRA) borrowers in the form of a guaranteed emergency credit line (GECL) facility. For this purpose, a corpus of Rs 41,600 crore was provided by the government, spread over the current and next three financial years. The scheme is applicable to all loans sanctioned under GECL facility during the period from the date of announcement of the scheme to October 31 or till an amount of Rs 3 lakh crore is sanctioned under GECL, whichever is earlier. The main objective of the scheme is to provide an incentive to member lending institutions to increase access and enable availability of additional funding facility to MSME borrowers, in view of the economic distress caused by the COVID-19 crisis, by giving them 100 per cent guarantee for any losses suffered by them due to non-repayment of the GECL funding by borrowers. All MSME borrower accounts with an outstanding credit of up to Rs 25 crore as on February 29, which were less than or equal to 60 days past due as on that date, i.e., regular, SMA-0 and SMA-1 accounts, and with an annual turnover of up to Rs 100 crore, are eligible for GECL funding under the scheme. DP BAL

Ensure effective rollout of Rs 3-lakh crore ECLGS for MSMEs: FM to pvt banks

New Delhi, Dec 16 () Union Minister Nitin Gadkari on Monday approved changes in the Interest Subvention Scheme guidelines for micro, small and medium enterprises, and said the modifications are expected to boost their productivity through access to credit at reduced cost.
 The Minister for Road Transport &amp; Highways and MSME reviewed the functioning of the scheme.
 "It is expected that the modifications in the scheme guidelines will lead to fulfilment of objectives of the scheme, i.e. to increase productivity in MSMEs through access to credit at reduced cost," Gadkari said.
 The minister highlighted that the government is committed to enhancing credit to the MSME sector and the implementation of the scheme is being closely monitored to help micro, small and medium enterprises (MSMEs) get incremental credit of up to Rs 1 crore with an interest subvention of 2 per cent.
 The modifications to the scheme include settlement of claims based on internal or concurrent auditor certificate and submission of statutory auditor's certificate once by June 30, 2020; and acceptance of claims in multiple lots for a given half year by eligible institutions.
 "The improvements are set to provide momentum giving fillip to the MSME sector," an official statement said.
 The Interest Subvention Scheme for MSMEs was launched by Prime Minister Narendra Modi in November 2018.
 Besides, in the modified scheme, requirement of Udyog Aadhaar Number (UAN) has been dispensed with for units eligible for GST and the last date of submission of claims for the half-yearly period ended March 31, 2019, has now been extended till December 31, 2019.
 Under the changes approved, trading activities without UAN have also been made eligible.
 "The modifications in operational guidelines carried out are based on suggestions made by various stakeholders, including banks and lending institutions who had brought to light operational difficulties which were hindering a smooth roll-out of the scheme," the statement said. RSN HRS

Gadkari approves changes in Interest Subvention Scheme for MSMEs

New Delhi, Jun 27 () Complimenting public sector banks for moving fast on Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for MSME sector, CII president Uday Kotak on Saturday expressed hope that the scheme will gather further traction in coming weeks from private banks side. The scheme is the biggest fiscal component of the Rs 20-lakh crore Aatmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman last month. "Private sector banks in the case of the guaranteed loan scheme have taken a little longer than the public sector banks. I must compliment SBI Chairman Rajnish Kumar and his team for moving at a great speed. So, I do accept that," Kotak, who is also managing director of Kotak Mahindra Bank, said. On May 21, the Cabinet had approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25 per cent through ECLGS for the MSME sector, hit hard by economic slowdown triggered by outbreak of COVID-19 pandemic. The scheme became operational from June 1. "Private sector banks started a few days later, but you will see catch up happen. "Three-four weeks from now, the MSME sector will be surprised at how both the private and the public sector have responded to this scheme of Rs 3 lakh crore and a very significant amount of money will be disbursed within the guidelines...you will see the significant growth happen in terms of the sanctions and disbursements," he said. Under the 100 per cent ECLGS, the loan amounts sanctioned by public sector banks increased to Rs 42,739.12 crore, of which Rs 22,197.54 crore has been disbursed at the end of June 20. Meanwhile, private sector banks sanctioned Rs 32,687.27 crore while disbursed Rs 10,697.33 crore. Kotak said that for private sector banks conservatism arises as they need to safeguard the interest of the depositors, whose trust in the private sector is critical for their functioning. On the issue of eligibility under the scheme, he said that in view of the revision in turnover limit for MSMEs from Rs 100 crore to Rs 250 crore, the eligibility conditions should also be relaxed similarly, and CII would be taking this suggestion to the government. Kotak advised MSMEs that they should not only depend on banks for accessing credit but also look at other avenues like raising private equity or risk capital. He also said that MSMEs are not only the backbone of the economy but are a critical part of CII theme for 2020-21 "Building India for a New World: Lives, Livelihood, Growth". MSMEs need risk capital to grow and CII would help them in strengthening their internal housekeeping so that they can get better access to credit at competitive rates, he added. KPM DP BAL BAL

Pvt banks to catch up soon on credit guarantee scheme for MSMEs: Kotak  

New Delhi, Jul 3 () The finance ministry on Friday said banks have disbursed Rs 52,255.53 crore loans under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector reeling under economic slowdown caused by the COVID-19 pandemic. However, this is against the sanction of Rs 1.10 lakh crore under the 100 per cent ECLGS for micro, small and medium enterprises (MSMEs) till July 1. The scheme is the biggest fiscal component of the Rs 20-lakh crore Aatmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman in May. The latest number on ECLGS, as released by the finance ministry, comprises disbursements by all 12 public sector banks (PSBs), 20 private sector banks and 9 non-banking financial companies (NBFCs). "As of July 1, the total amount sanctioned under the 100 per cent Emergency Credit Line Guarantee Scheme by #PSBs and private banks stands at Rs 1,10,343.77 crore, of which Rs 52,255.53 crore has already been disbursed," the finance minister said in a tweet. Under the 100 per cent ECLGS, the loan amounts sanctioned by PSBs increased to Rs 63,234.94 crore, of which Rs 33,349.13 crore has been disbursed as of July 1, she said. At the same time, private sector banks have sanctioned Rs 47,108.83 crore, while disbursed Rs 18,906.40 crore. "The June 30 update of the 100 per cent ECLGS loans to #MSME hubs marks a substantial increase over the June 24 update in terms of the amounts sanctioned and disbursed, and the number of accounts benefiting from the Scheme," Sitharaman said. In another tweet, she said: "As of 30 June, #PSBs have sanctioned loans worth Rs 15,674.74 crore for 71 #MSME hubs in 27 States/UTs under the 100% Emergency Credit Line Guarantee Scheme, of which Rs 9,074.04 crore has already been disbursed." Ahemdabad clustor has the highest sanction of Rs 1,910 crore, followed by Surat Rs 1,602 crore as on June 30. Market leader SBI has sanctioned Rs 20,281 crore and disbursed Rs 12,885 crore as on June 26. It is followed by Punjab National Bank with a sanction of Rs 7,957 crore, but disbursement was at Rs 2,404 crore as of July 1. Leading the state tally, business units of Maharashtra have got the highest cumulative sanction of Rs 6,578 crore from banks, while disbursement was to the tune of Rs 3,310 crore at the end of July 1. It is followed by Tamil Nadu with a sanction of Rs 6,390 crore, with disbursement of Rs 3,695 crore. On May 21, the Cabinet approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25 per cent through ECLGS for the MSME sector. Under the scheme, 100 per cent guarantee coverage will be provided by National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs 3 lakh crore to eligible MSMEs and interested Micro Units Development and Refinance Agency (MUDRA) borrowers, in the form of a guaranteed emergency credit line (GECL) facility. For this purpose, a corpus of Rs 41,600 crore was set up by the government, spread over the current and next three financial years. The scheme will be applicable to all loans sanctioned under GECL facility during the period from the date of announcement of the scheme to October 31 or till an amount of Rs 3 lakh crore is sanctioned under GECL, whichever is earlier. All MSME borrower accounts with an outstanding credit of up to Rs 25 crore as on February 29, which were less than or equal to 60 days past due as on that date, i.e., regular, SMA-0 and SMA-1 accounts, and with an annual turnover of up to Rs 100 crore, are eligible for GECL funding under the scheme. DP HRS

Banks disburse over Rs 50,000 cr loans to MSMEs under credit guarantee scheme

New Delhi, Mar 26 () More than a dozen public sector banks out have announced COVID-19 Emergency Credit Line to deal with the hardship faced by various sectors of the economy. Though public sectors banks (PSBs) were quick to respond with steps to deal with the hardship faced by various sectors of the economy, private sector banks such as ICICI Bank, HDFC Bank and Axis Bank are yet to come out with any relief measures for their customers. As many as 15 PSBs out of the total 18 government-owned banks till Thursday evening announced schemes to mitigate hardship faced by various segments. Taking the lead, the country's largest lender SBI last week announced an emergency credit line to meet any liquidity mismatch for its borrowers. The additional liquidity facility COVID-19 Emergency Credit Line (CECL) will provide funds up to Rs 200 crore and will be available till June 30, SBI said in a circular issued on Friday. Following the suit, Punjab National Bank, Bank of Baroda, Canara Bank, Union Bank of India and Bank of India. Besides, Indian Bank, Bank of Maharashtra, Syndicate Bank, Indian Overseas Bank, UCO Bank and Andhra Bank have also introduced relief schemes till date for meeting liquidity requirements under COVID-19 emergency. "In wake of #CORONA virus Out break, #OBC supports all its existing borrowers by launching COVID19 Emergency Credit Facility which would help them meet temporary liquidity mismatch in operating cycle," Oriental Bank of Commerce said in a tweet on Thursday. Another public sector lender United Bank of India also launched a special scheme "UBI COVID-19 Emergency Credit Facility" for its existing MSME, agriculture and other business segment borrowers. PSBs have announced schemes for existing MSME borrowers with some banks additionally extending schemes to other segments including agriculture, self-help groups, organised sector employees, a senior public sector bank official said. The quantum of loan is in the form of additional line of credit ranging from 10 per cent or higher of existing working capital limits, the official said adding that the banks have kept provision for creation of charge on existing securities for this additional facility without seeking any fresh requirement of prime or collateral security. The loan schemes have a moratorium period of up to 6 months. The official further said the public sector banks are gearing up to do heavy lifting with regards to various direct benefit transfer scheme announced by Finance Minister Nirmala Sitharaman on Thursday. Even state-owned financial institution SIDBI announced a concessional interest rate of 5 per cent for MSME under the SIDBI Assistance to Facilitate Emergency Response against coronavirus. The micro, small and medium enterprises that are into manufacturing of any products or providing any services related to fighting pandemic such as senitisers, masks, gloves and body suit ventilators will get loan at a concessional rate of 5 per cent, SDBI said in a statement. DP HRS

More than dozen PSBs announce COVID-19 emergency credit line

New Delhi, May 22 () Finance Minister Nirmala Sitharaman on Friday held a review meeting with CEOs of public sector banks (PSBs) and asked them to implement the mega 'Aatmanirbhar' relief package to revive the COVID-hit economy. The meeting via video conferencing took place in the backdrop of the Rs 21 lakh crore stimulus package announcement and the Reserve Bank coming out with fresh measures, including interest rate cuts. The Union Cabinet headed by Prime Minister Narendra Modi on Wednesday gave its nod for many of the schemes announced as part of 'Aatmanirbhar Bharat Abhiyan' package to prop up the economy reeling under the COVID-19 crisis. "Finance Minister Smt.@nsitharaman chairing the review meeting, through VC, with the chief executives of PSBs today to review the readiness of banks in implementing 'Aatmanirbhar' relief package," the Finance Ministry said in a tweet. "To operationalise the announcements made by Hon'ble FM @nsitharaman ji under #AatmanirbharBharat, review meeting through VC was held with all PSBs. Everyone aligned on the need for quickly addressing the needs of MSMEs &amp; other customers. Operational details to be released soon," the Department of Financial Services, Ministry of Finance, said in a tweet. The finance minister has emphasised on the quick disbursal of additional loans to MSMEs, to simplify process, formats and documentation, Indian Bank managing director Padmaja Chunduru said after the meeting. Since the Union Cabinet has already given approval to various schemes announced under the package, operational guidelines have been issued to banks. The most important among them is the Emergency Credit Line Guarantee Scheme (ECLGS) worth Rs 3-lakh crore for MSMEs hit hard by the coronavirus crisis. The 100 per cent guarantee scheme at the concessional rate of 9.25 per cent was the second-biggest component of the Rs 20 lakh crore comprehensive package announced by Sitharaman last week. Currently, the rate of interest on loans given by banks to the MSME sector varies from Rs 9.5 per cent to 17 per cent, depending on the risk perception. The MSME sector is considered as the backbone of country's economy as the sector contributes over 28 per cent of the GDP and more than 40 per cent of exports, while creating employment for about 11 crore people, second highest after agriculture. The scheme is expected to benefit 45 lakh MSME units. Other scheme to help the stressed MSME sector also included Rs 20,000 crore subordinate debt for stressed or loan defaulting MSMEs, which could benefit 2 lakh such businesses. A fund of funds for MSME is also being created, which will infuse Rs 50,000 crore equity in MSMEs with growth potential. After the meeting, Central Bank of India managing director and CEO Pallav Mohapatra said the finance minister took stock of the situation and reviewed the progress of various schemes. "All the banks are very-very optimistic about the schemes that have been announced in the recent past by the government to support the economy. State-run banks sanction in the COVID-19 period is more than the corresponding period last year, which was a normal year," he said. "Loans worth over Rs 6.68 lakh crore were sanctioned by PSBs during March 1 - May 19 for 59.79 lakh accounts from MSME, Retail, Agriculture &amp; Corporate sectors. A steady increase in credit availability for each of these vital sectors" the finance ministry had tweeted earlier in the day. "Public Sector Banks sanctioned over Rs 1.07 lakh crore as emergency credit lines &amp; working capital enhancements in the period March 20 to May 19, with Rs 25,527 crore of this amount already being availed by customers," it said. Later, in an interview with DD News, the finance minister said the meeting with the public sector banks was "very good". She commended the work done by the public sector banks for the implementation of the Rs 1.70 lakh crore PM Garib Kalyan Yojana, which was an announcement made within two days after the lockdown was announced. "I must give credit to the public sector banks for having done a splendid job in implementing PM Garib Kalyan Yojana. So now with that same spirit this (Rs 20 lakh crore) package we have come up with, a partial guarantee, full guarantee for all enterprises... which banks will have to do. I was very reassured that the banks spoke in a very positive way," she said. On the credit guarantee scheme, Mohapatra said the government's commitment is for the entire Rs 3 lakh crore. "The commitment on the government under this Rs 3 lakh crore collateral free loans is 100 per cent." During deliberations, Indian Bank's Chunduru said, "Banks decided to focus also on Tier Ii and Tier III towns in all states to ensure needy MSMEs get the succour. CEOs of PSBs welcomed the Rs 3 lakh crore fully guaranteed loan component to MSMEs and assured the FM that all eligible units will get these loans promptly." Central Bank's Mohapatra said, "Risk aversion, to a great extent, has gone. No actions are being taken for any commercial decision going wrong because of other reasons." The meeting also took stock of interest rate transmission to borrowers by banks and progress on moratorium on loan repayments. The RBI has increased the moratorium on loan repayment by another three months till August 2020 to provide relief to borrowers whose income has been hit due to the crisis. DP MKJ

FM meets PSU bank chiefs, prods them to implement 'Aatmanirbhar' relief package

New Delhi, Jun 2 () Stating that there is a very thin line between risk aversion and risk prudence, State Bank of India Chairman Rajnish Kumar on Tuesday said the banks are ready to finance but there are no takers for bankable loans. He also said the bank is very bullish about the Rs 3 lakh crore credit guarantee scheme for MSME, and through the scheme the government has indirectly infused Rs 30,000 crore into public sector banks. Speaking about criticism for parking deposit money with the RBI, Kumar said, there is deluge of funds but there is no commensurate demand for loan. So, banks have no choice but to park with RBI as there is risk aversion from the side of borrowers as well, he said while addressing India Inc at CII Annual meet. "I hear a lot about risk aversion, but the dividing line between risk aversion and risk prudence is very thin. One question which I have been asking is -- is there risk aversion only amongst lenders or there is risk aversion amongst borrowers also. Are they willing to leverage? Are they willing to invest?" he wondered. Citing an example, he said, when the government slashed corporate tax rate drastically in September last year, many were of the view that investment will take place, but it has not taken place. "As a banker and as the chairman of the largest bank, I am saying I have money, there are no takers of the money. Investment if you look in the last five years, the capex has gone down distinctly...no major projects have been announced. And by the way, the services sector particularly IT don't consume any major capital," he said. Ultimately, he said, it is the manufacturing or infrastructure sector, which consumes money. Between 2008 and 2015, it was the power sector which consumed maximum capital for putting up 75,000 MW capacity, he said. Kumar said that the corporate sector should not expect much from the government but have to be self-reliant or "atmanirbhar", given the fiscal position of the government. "Maybe the corporate sector would have to look for all the opportunities themselves," he said. He also said that if more has to be given to the system, banks would require capital support from the government. On the Rs 3 lakh crore credit guarantee scheme, Kumar said, risk weight for the scheme is zero and public sector banks do not have to provide any capital for this. So, in a way there is indirect capital infusion of Rs 30,000 crore, he said. "We are very bullish on this scheme. In a single day, we have disbursed 22,000 loans of worth Rs 3,000 crore. So, this is a very good scheme for supporting MSME sector," he said. The scheme is the biggest fiscal component of the Rs 20-lakh crore Self Reliant India Mission package announced by Finance Minister Nirmala Sitharaman last month. Under the scheme, 100 per cent guarantee coverage will be provided by National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs 3 lakh crore to eligible MSMEs and interested MUDRA borrowers, in the form of a guaranteed emergency credit line (GECL) facility. For this purpose, a corpus of Rs 41,600 crore was provided by the government spread over the current and the next three financial years. The scheme will be applicable to all loans sanctioned under GECL facility during the period from the date of announcement of the scheme to October 31 or till an amount of Rs 3 lakh crore is sanctioned under GECL, whichever is earlier. The main objective of the scheme is to provide an incentive to member lending institutions (MLIs) like banks, financial institutions (FIs) and non-banking financial companies (NBFCs) to increase access to, and enable availability of additional funding facility to MSME borrowers, in view of the economic distress caused by the COVID-19 crisis, by providing them 100 per cent guarantee for any losses suffered by them due to non-repayment of the GECL funding by borrowers. All MSME borrower accounts with an outstanding credit of up to Rs 25 crore as on February 29 which were less than or equal to 60 days past due as on that date, i.e., regular, SMA-0 and SMA-1 accounts, and with an annual turnover of up to Rs 100 crore would be eligible for GECL funding under the scheme. DP BAL

There is risk aversion at borrowers' end, says SBI Chairman

New Delhi, Mar 18 () DMK parliamentarian T K S Elangovan on Wednesday expressed concern over the decline in the share of MSME sector in the country's GDP to 28 per cent from 45 per cent in 2011 and said smaller industries were suffering due to lack of bank financing. Initiating the discussion on working of the Ministry of Micro, Small and Medium Enterprises (MSME), he said the allocation to the sector was lowered in the revised estimate during 2018-19. Elangovan said micro, small and medium enterprises need funds for technology upgradation and infrastructure, but banks were not proving funds. The government should support small industries and banks should lend, he added. Stating that the MSME sector provide huge employment opportunities to people, the DMK leader said the government should re-evaluate its strategy and provide support to this sector for economic development of the country. Countering his charges, Arun Singh of the BJP highlighted various initiatives by the central government to strengthen the MSME sector. He said there was no development in the MSME sector in the last 70 years because of piecemeal approach by previous governments. Participating in the discussion, Amee Yajnik of the Congress said demonetisation has finished this sector and "we have to face it". "You cannot run away, you cannot remain in denial mode," she said, requesting the minister to look into the budgetary allocation and consider simplification of schemes so that it can reach the last person. A Vijayakumar of the AIADMK said Tamil Nadu continues to be a vibrant industrial state with a large base of big factories and small units, with the state having an estimated seven lakh registered MSMEs or 15.1 percent of all such units in the country. "I urge the government to allocate Rs 5,000 crore as one-time special package to support the MSME sector in Tamil Nadu," he said, adding that because of the coronavirus outbreak, the production has been suffering for two months. Ravi Prakash Verma of the Samajwadi Party said MSME units are the backbone of the economy but the sector is facing distress due to various factors. He urged the Centre to raise the budgetary allocation for the MSME ministry. As per Budget estimates, an outlay of Rs 7,572 crore has been earmarked for the MSME Ministry for 2020-21. Sasmit Patra of the BJD said the coronavirus outbreak is going to negatively impact the MSME sector. Elamaram Kareem of the CPIM said MSMEs play a crucial role in providing large-scale job opportunities with the sector employing over 11 crore people. He said the MSME sector has suffered the most due to demonetisation and "unscientific implementation" of the Goods and Services Tax (GST). Anil Desai of the Shiv Sena said consumption slowdown and liquidity constraints have severely impacted the MSME sector. Manoj Kumar Jha of the RJD said the government and Opposition parties can collectively draw a blueprint to help the MSME sector. He said signals are "worrisome" and the sector is going to "bleed" particularly in view of the economic slowdown. Binoy Viswam of the CPI said if the government is serious about MSMEs, first of all it should undertake a study on the impact of demonetisation on the sector. Praful Patel of the NCP said the MSME sector needs to be supported as crores of livelihoods are dependent on it. RSN SMNSMN

DMK MP expresses concern over decline in MSME sector's share in GDP

Lucknow, Nov 18 () An export promotion body on Monday suggested the government to bring out a separate policy for micro, small and medium units to address their problems.
 The Export Promotion Council (EPC) also urged the Uttar Pradesh government to link such a policy with its one-district one-product scheme. 
 The EPC highlighted various problems like credit availability and fund cost faced by MSMEs and exhorted the state and central governments and the RBI to address these issues on a priority basis.
 "Despite the significant contributions of the MSME sector, this sector is still facing several challenges such as availability of adequate and timely credit, high cost of credit, collateral requirements, access to equity capital and revival of sick units," EPC Chairman D S Rawat said here.
 "In view of these problems, the governments need to bring a separate policy for the micro and small industry and UP government should link its ambitious one-district one-product scheme with it," Rawat stressed.
 To help the sector, the EPC also announced a four-day summit and trade fair on Agro-rural entrepreneurship, unleashing opportunities for youth, women and artisans on February 13-16 in Lucknow followed by SC-ST Entrepreneurship and Women Empowerment in Purvanchal in May next year.
 The trade fair will be inaugurated by Prime Minister Narendra Modi and Home Minister Amit Shah and Defense Minister Rajnath Singh will also attend, Rawat pointed out.
 During the press conference, Rawat and Chairman of the UP Chapter of the EPC Harinarayan Rajbhar jointly released the study on MSME Sector - Uttar Pradesh.
 The state has acquired number one position both in numbers and employment.
 Uttar Pradesh has registered a 100 per cent growth in micro, small and medium enterprises between 2015-16 and 2017-18 from 44.03 lakh to 88.89 lakh, according to the study, according to the study undertaken by the MSME Export Promotion Council (MSME EPC).
 The state has been on an average adding 15 lakh new MSME units every year since 2015-16 and providing jobs to more than 165 lakh people, 27.27 lakh to female and 137.92 lakh to male, the study says. SAB SHW MR
MR

Export promotion body demands separate policy for MSMEs

The Centre would shortly launch an exclusive scheme for women entrepreneurs, a senior official in the Ministry of Micro, Small and Medium Enterprises (MSME) said today, according to a news agency. 
 
"It will be an exclusive scheme for women entrepreneurs. We have not yfinalised the contours (of the scheme). Hopefully, we will launch it before the end of the financial year," B H Anil Kumar, a Joint Secretary in the Ministry, told reporters here. 
 
Earlier, he launched myloanassocham.com, a portal, industry body ASSOCHAM said, that provides MSMEs online access to funds at an affordable rate from a mix of banks and financial institutions. 
 
Kumar said the figures that the MSME sector contributes 8 per cent to the country's GDP, 45 per cent of the manufacturing output and 40 per cent of the exports are based on survey reports of 2007. 
 
Those survey reports have been extrapolated. It's a random survey, and it's not clear how much of that figure is based on hardcore data, according to him. 
 
In this background, the Ministry is in the process of creating an MSME data bank based on which it can project the actual requirements of the sector, he said and asked these enterprises to register themselves. 
 
Reserve Bank of India, Kumar said, has issued guidelines for creation of committees for revival and rehabilitation of MSMEs which are facing stress. Banks are in the process of setting them up at State levels. 
 
Noting that 90 per cent of MSMEs in India are either based on proprietorship or partnership model, Kumar pitched for they putting in place a corporate structure so that an enterprise "does not die when entrepreneur passes away".

Govt to launch exclusive scheme for women entrepreneurs

<bulletContentEmbed name="INAUGURAL ADDRESS (POLICY)" columns="1"><bulletContentHeading name="INAUGURAL ADDRESS (POLICY)_head"><div type="image" title="100153980" msid="101167632" hostid="261" sizebytes="345127"></div></columnHeadThumb>INAUGURAL ADDRESS (POLICY)</columnHeadTitle></columnHead></bulletContentHeading><bulleteContentBody name="INAUGURAL ADDRESS (POLICY)_body"><bulletContentRow name="INAUGURAL ADDRESS (POLICY)_9886212833743733"><bulletContentRowHeading><bulletContentRowHead col="1">Promoting <keyword id="6358354" type="General" weightage="20" keywordseo="msme" source="Orion">MSME</keyword> growth &amp; ease of doing business</bulletContentRowHead></bulletContentRowHeading><bulletContentRowBody><bulletContentRowCell col="1">Small businesses are the growth engine for India’s economy. We shine the spotlight on the policy push to foster ease of doing business by providing faster avenues of credit and schemes to support the MSME sector. And more importantly, the need for digitising the lending process to enhance the ecosystem and overcome challenges.</bulletContentRowCell></bulletContentRowBody></bulletContentRow></bulleteContentBody></bulletContentEmbed> <bulletContentEmbed name="KEYNOTE ADDRESS" columns="1"><bulletContentHeading name="KEYNOTE ADDRESS_head"><div type="image" title="100153980" msid="101167642" hostid="261" sizebytes="345127"></div></columnHeadThumb>KEYNOTE ADDRESS</columnHeadTitle></columnHead></bulletContentHeading><bulleteContentBody name="KEYNOTE ADDRESS_body"><bulletContentRow name="KEYNOTE ADDRESS_2649762537898081"><bulletContentRowHeading><bulletContentRowHead col="1">Fuelling MSME growth for $5 trillion economy</bulletContentRowHead></bulletContentRowHeading><bulletContentRowBody><bulletContentRowCell col="1">India’s journey towards a five trillion economy is going to be powered by small and medium businesses – these engines of innovation. There is a collective need to ideate, innovate and create tools that will boost the MSME landscape for the next decade.</bulletContentRowCell></bulletContentRowBody></bulletContentRow></bulleteContentBody></bulletContentEmbed>

Day 1

New Delhi, Jun 30 () The finance ministry on Tuesday said banks have sanctioned over Rs 1 lakh crore loans under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector reeling under coronavirus-induced economic slowdown. While, Rs 45,860 crore is disbursed under the 100 per cent ECLGS for the micro, small and medium enterprises (MSMEs) till June 26, it said. The scheme is the biggest fiscal component of the Rs 20-lakh crore 'Aatmanirbhar Bharat Abhiyan' package announced by Finance Minister Nirmala Sitharaman last month. The latest number on ECLGS, as released by the Finance Ministry, comprises all 12 public sector banks (PSBs), 20 private sector banks and 8 NBFCs. "Under the 100 per cent ECLGS backed by a government guarantee, banks from public and private sectors have sanctioned loans worth over Rs 1 lakh crore as of June 26, 2020, of which more than Rs 45,000 crore has already been disbursed," the finance ministry said in a statement. This would help more than 30 lakh units of MSMEs and other businesses restart their businesses post the lockdown, it said. PSBs have sanctioned loans of Rs 57,525.47 crore, whereas private sector lenders have sanctioned Rs 44,335.52 crore under ECLGS, which started on June 1, it said. As on June 26, public sector banks have disbursed Rs 29,232 crore and private sector peers Rs 16,628 crore. The top lenders under the scheme are State Bank of India, Bank of Baroda, Punjab National Bank, Canara Bank and HDFC Bank, it added. Market leader SBI has sanctioned Rs 19,593 crore and disbursed Rs 12,026 crore as on June 26. It is followed by Bank of Baroda with a sanction of Rs 7,273 crore and disbursement at Rs 2,695 crore. The second largest lender Punjab National Bank was at the third spot, as per the data, with the cumulative sanction of Rs 7,188 crore. Its disbursement was nearly one-third at Rs 2,125 crore. State-wise, business units of Maharashtra have got the highest cumulative sanction of Rs 6,179 crore from banks, while disbursement was to the tune of Rs 2,774 crore at the end of June 26. It is followed by Uttar Pradesh with a sanction of Rs 5,646 crore, with disbursement of Rs 2,861 crore. On May 21, the Cabinet had approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25 per cent through ECLGS for the MSME sector. Under the scheme, 100 per cent guarantee coverage will be provided by National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs 3 lakh crore to eligible MSMEs and interested Micro Units Development and Refinance Agency (MUDRA) borrowers, in the form of a guaranteed emergency credit line (GECL) facility. For this purpose, a corpus of Rs 41,600 crore was provided by the government, spread over the current and next three financial years. The scheme will be applicable to all loans sanctioned under GECL facility during the period from the date of announcement of the scheme to October 31 or till an amount of Rs 3 lakh crore is sanctioned under GECL, whichever is earlier. The main objective of the scheme is to provide an incentive to member lending institutions to increase access and enable availability of additional funding facility to MSME borrowers, in view of the economic distress caused by the COVID-19 crisis, by giving them 100 per cent guarantee for any losses suffered by them due to non-repayment of the GECL funding by borrowers. All MSME borrower accounts with an outstanding credit of up to Rs 25 crore as on February 29, which were less than or equal to 60 days past due as on that date, i.e., regular, SMA-0 and SMA-1 accounts, and with an annual turnover of up to Rs 100 crore, would be eligible for GECL funding under the scheme. DP MKJ MKJ

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