India Inclusive Innovation Fund to target the 'Bottom of the Pyramid' MSMEs

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January 28, 2013 - The Ministry of MSME is working towards the creation of an 'India Inclusive Innovation Fund, to cater to the credit requirements of the bottom of the pyramid enterprises, among MSMEs, stated Mr Vivek Rae, Secretary, Ministry of MSME, while inaugurating the Conclave on Credit and Finance for MSMEs, organised by CII, in New Delhi. Mr Rae mentioned that this would be a Rs 5000 crore fund, however to begin with, a corpus of Rs 500 crore would be set aside for the fund of which the government would put in Rs 100 crore while the balance would be contributed by banks and financial institutions. The scheme, which would be operationalised within three months, would take equity stake in companies at the bottom of the pyramid and promote venture capital among MSMEs.

Mr Rae expressed concern regarding the fact, that MSMEs faced financial exclusion from the banking system, despite detailed guidelines by RBI to banks on disbursal of credit to MSMEs, being in place. Mr Rae was strongly in favour of increasing the penetration of MSMEs in the banking system and called for imposing accountability.

Chairing the session on Financial Intermediation for MSMEs - Role of banks and Rating Agencies, Mr C K Mishra, Joint Secretary, Ministry of MSME reiterated the commitment of the Ministry of MSME, for facilitating the availability of credit & finance for MSMEs. He added that it was hence important that all stakeholders in the MSME domain share the similar wavelength, and the bankers had to play a very important role in achieving this. In the present context it is the implementation and monitoring of the existing guidelines, that shall improve the scenario for the MSMEs, he mentioned.

In his Keynote Address at the Conclave, Mr N K Maini, Deputy Managing Director, SIDBI shared that there existed a gap of about Rs 7 trillion for the MSMEs, as reported by the IFC Report on SME Financing. Mr Maini mentioned that it will be through both the traditional and non-traditional modes of finance, the gap could be filled. SIDBI, as the apex financial institution for the MSMEs was committed to help bridge this gap, he added.

Mr Ravi Tyagi, Head of the SME Project of the National Stock Exchange (NSE) was of the view that SME platform will fulfil the long pending need for raising Equity finance, for the SMEs, from Primary Markets. He exhorted CII to work with NSE and SIDBI towards streamlining guidelines, to enhance the appeal of raising funds from the Primary markets, by the SMEs.

Earlier, Mr Satish Kaura, Co-Chairman, CII Defence Council and CMD, Samtel Color Ltd said that CII has been actively working with Reserve Bank of India (RBI), the Indian Banks Association (IBA), local industry associations, as well as with the banks. With a view to facilitate timely availability of credit at a competitive cost and to promote the credit rating among the banks & the industry, CII will strive to bring the credit rating procedures at acceptable levels, by all the banks, through active involvement of all stakeholders.

Mr Gurpal Singh, Principal Adviser & Head MSMEs, CII in his Concluding Remarks shared that CII was actively working with all the stakeholders, to address the dual issues of 'Procurements' & 'Delayed Payments', being faced across the industry, but specifically causing immense hardships for the MSMEs. CII is also in the process of proposing a Governance Code on Procurements & Payments by the Industry, he added.

The other key speakers at the conclave included senior officials from Indian Overseas Bank (IOB), State Bank of India (SBI), IRIS Business Services Limited, CRISIL Limited, Religare Finvest Limited, Avigo Capital Partners, SMC Global Securities Ltd, International Finance Corporation (IFC), IFCI Factors Limited, SBI Global Factors Limited and entrepreneurs from across the country.

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