With a view to allay the trade finance woes of micro, small and medium enterprises (MSMEs), the Union Government has planned to more than double the credit guarantee up to Rs 500 billion for 2018-19 under the Credit Guarantee Fund Trust For Micro and Small Enterprises (CGTMSE) scheme set up by MSME Ministry, a top official said at an ASSOCHAM event held in New Delhi recently.
“We have taken some decisions, we are allowing NBFCs (non-banking financial companies) partial collateral and this year, unlike previous years where, from fund we used to guarantee a credit flow of Rs 190-200 billion every year for last three years, we plan to cross Rs 400 billion, it may touch Rs 500 billion,” said A.K. Panda, MSME secretary while inaugurating an ASSOCHAM conference on ‘Role of Trade Finance.’
He also said that MSME Ministry has taken certain concrete steps as part of structural reforms and is thus expecting about four lakh such credit proposals. To ensure credit availability to MSMEs for inclusive growth, the Ministry is also holding discussions with all banks and NBFCs and is planning that 70,000 units giving employment generation to almost 5 lakh people be taken up this year itself.
Noting that MSMEs comprise almost 95-96 per cent out of the one crore entities registered in the Goods and Services Tax Network (GSTN), the secretary said that it is more than the 47 lakh MSMEs registered under the Ministry’s Udyog Aadhaar Memorandum. Thus there is need for a database to communicate with them and to tell them about the facilities that they can avail.
“In the Ministry we are trying to work with GSTN so that we can have an integrated database where we can communicate with MSMEs if we have their details and work on the problems faced by them,” he added.
“GST has given a huge opportunity for MSMEs to actually come to a formal economy where we can talk to them and there can be an aggregation of their products and services and there can be a focussed kind of an initiative by Government, industry associations, bankers, export houses and international organisations so that at least their products and services can be showcased, sold and there can be better participation in the trade,” further said A.K. Panda.
The MSME secretary informed that in order to ensure that credit flow for MSMEs is up to the expectation, gaps are bridged and their problems are addressed, the Ministry is holding discussion with the Reserve Bank of India (RBI) about promoting fintech companies who can reach out much better than the scheduled commercial banks to the MSMEs all across India.
He also informed that MSME Ministry would be constituting a special task force to look at exactly what steps are needed to be taken to enhance exports from MSMEs, to make them part of the global value chain and also identify those MSMEs which are almost there and with little bit of facilitation and push they can come.
He further said that this will sound interesting to the large players and it will make sense to them commercially as MSMEs always come up with local innovations to cut costs. “Now the time has come for banks, NBFCs, MFIs, fintech companies, international financial institutions and the associations to come together for hand-holding and giving little help and push to MSMEs. Unless and until we do that we will not be able to have inclusive growth and employment generation,” said Panda.
He also said that the Union Ministry will seek support of state governments to put up details of MSMEs on the MSME Samadhan Portal. Besides Micro and Small Enterprise Facilitation Council (MSEFC) will also take care of this to ensure that small enterprises do not get stuck and their payments are made in time.
In his address at the ASSOCHAM conference, EXIM (Export–Import) Bank managing director, David Rasquinha suggested Reserve Bank of India (RBI) to look at further dialoguing with the FinMin (Ministry of Finance) and the International Basel Committee to find a way to make trade finance more reflective of the actual risks rather than a perceived artificial framework which relies predominantly on rating.