FICCI : Industry's Voice for Policy Change

Credit and Finance for MSMEs: Member lending institutions (MLIs) including public and private sector banks and non-banking financial companies (NBFCs) have sanctioned 76.6 per cent of the Rs 3-lakh-crore Emergency Credit Line Guarantee Scheme (ECLGS) as of January 29, 2021. In a written reply to a question in the Rajya Sabha on Tuesday, MoS Finance Anurag Singh Thakur said that cumulative loans sanctioned, as reported by various MLIs to National Credit Guarantee Trustee Company Ltd (NCGTC) stand at Rs 2.39 lakh crore under ECLGS as of January 29, 2021.

This is up from the sanctioned loan amount of Rs 2,14,083 crore to 90,57,300 borrowers as of January 8, 2021. Out of the sanctioned amount, Rs 1,65,886 crore was disbursed to 42,46,831 borrowers, according to the data from the Finance Ministry. The scheme was launched in May last year to support Covid-hit MSMEs but was later extended till March 31, 2020, with the launch of ECLGS 2.0 that was expanded in scope. The amended version of the scheme focused on entities in 26 stressed sectors identified by the Kamath Committee including power, construction, iron and steel manufacturing, roads, real estate, textiles, chemicals, consumer durables, non-ferrous metals, pharma manufacturing, logistics, gems and jewellery, cement, auto components, hotels-restaurants-tourism, mining, plastic product manufacturing, automobiles manufacturing, auto dealership, aviation, sugar, port and port services, shipping, building materials, and corporate retail outlets, Thakur noted.

Accounts with credit outstanding of more than Rs 50 crore and up to Rs 500 crore as of February 29, 2020, are eligible to raise credit under ECLGS 2.0. The scheme also seeks borrower accounts to be less than or equal to 30 days past due as of February 29, 2020, that is, they should not have been classified as SMA 1, SMA 2, or NPA by any of the lenders as of February 29, 2020. SMAs are special mention accounts showing signs of incipient stress that lead to the borrower defaulting in servicing loan.

Budget 2021 had made a provision of Rs 15,700 crore to the MSME sector – more than double from Rs 7,572 crore in the preceding budget. Finance Minister Nirmala Sitharaman had also proposed a revision of the definition of small companies in the budget by enhancing thresholds for paid-up capital from Rs 50 lakh to Rs 2 crore and turnover from Rs 2 crore to Rs 20 crore. “This will benefit more than two lakh companies in easing their compliance requirements,” the minister said. “Provision of Rs 15,700 crores for MSME sector is welcome as this sector needs huge finance and policy support. Also, the announcement that faceless dispute resolution committee will be set up for smaller companies is very appreciable and commendable,” said Sanjay Bhatia, MD, Hindustan Tin Works, and Past President, FICCI CMSME told Financial Express Online.

The Economic Times | Jan 15, 2021

Why technology is the only path to sustained growth for MSMEs

The Covid-19 pandemic catapulted the majority of Indian businesses to shift online to scale up and succeed, with small business owners waking up to the need of technology as the only path for sustained growth.

However, the majority of India’s Micro, Small and Medium Enterprises (MSMEs), that employ over 120 million people and contribute significantly to the GDP, unfortunately, are far away from reaping benefits of digitalisation.

Already reeling under the lack of access to credit and inability to leverage newer technologies like cloud computing, IoT, consumer analytics, the MSME sector was further hammered by challenges of business continuity and reduced cash flows due to the pandemic.

Small businesses don't necessarily have the resources to make large investments in technology but the disruption has made them realise how adopting to digital can help them take advantage of opportunities in today's changing environment. Even as MSMEs are struggling for survival, it is crucial to evaluate what the Government and technology companies can do to help small businesses carve out a growth path for themselves.

For the economy to recover from the adverse effects of this pandemic, the MSME sector needs to form the bulwark of the revival plan. The Economic Times Digital Payments Forum presented by Mastercard aims to start a dialogue on how digital technology and small businesses can profitably marry.

The imminent panel will have Akhilesh Tuteja, Partner & Head, Digital Consulting, KPMG India, Shashank Kumar, Co-Founder and CTO, Razorpay and R Narayan, President, FICCI-CMSME, Founder & CEO, Power2SME as speakers to raise concerns faced by Indian MSMEs.

Sandeep Malhotra, Executive VP, Products & Innovation, Mastercard, Prakash Mallya, VP and MD, Sales, Marketing & Communications Group, Intel India and Dr KP Krishnan, NCAER will also join the panel as speakers.

The Dialogue “Technology in Small Business – The Path to Sustained Growth” will deliberate on the digitisation of SMBs/SMEs and how the adoption of digital payments will shape the future path to sustained growth. Other key areas of discussion include:

Affordable innovations which tech companies can deliver to small businesses

Beyond ease of transactions, how can digital payments help SMBs ride the wave of economic recovery?

Policy interventions to help reduce the digital gap between large and small companies.

How digital tools can help SMBs derive greater insight into customer preferences and drive effective engagement.

The dialogue will be moderated by Alokesh Bhattacharyya, Senior Editor, The Economic Times and Suchetana Ray, Senior Assistant Editor, The Economic Times. To register for the exclusive session on January 20, 3:00 PM, click here.