Ease of Doing Business for MSMEs: The Parliamentary standing committee on finance has advised growing the Udyam portal right into a one-stop central knowledge repository for the MSME sector by linking it with different databases reminiscent of CIBIL knowledge, utility payments knowledge and so on. The portal is at the moment already linked with the Government e-Marketplace (GeM), Income Tax, GST and Trade Receivables Discounting System (TReDS) portals. However, “the committee still feel that whatever data is there with regard to MSME sector, they exist in a fragmented manner and there is no real integration across multiple datasets…Such a database could then be accessed by lenders, after getting the MSME borrower’s consent, to extend timely credit to them,” mentioned a report tabled by the committee in Lok Sabha on strengthening credit score stream to the MSME sector.
Minister Nirmala Sitharaman had additionally introduced linking the Udyam portal with e-Shram, National Career Service (NCS) and Atmanirbhar Skilled Employee-Employer Mapping (ASEEM) within the funds to reinforce skilling and recruitment for MSMEs.
The committee additionally pitched for making a ‘UPI for MSME Lending’ for all MSMEs within the formal sector to entry small-ticket working capital loans in a mobile-based, contactless, paperless, and low-cost method. “To enable this digital vision of MSME credit to come to life, the committee believe that information needs to be used to replace physical collateral: this is cash flow lending or flow-based lending,” the report offered on April 8 famous.
While lenders is probably not snug giving massive ticket loans to MSMEs over a 5 or 10-year interval with out collateral, unsecured small-ticket loans over a 60 or 90-day interval could be worthwhile for lenders because the transaction value underneath the money flow-based method could be introduced down ‘enough’, the Parliamentary panel mentioned.
For Udyam-registered MSMEs, the panel additionally beneficial a ‘Vyapar’ bank card scheme for MSMEs underneath SIDBI akin to the Kisan Credit Card (KCC) scheme of the National Bank for Agriculture and Rural Development (NABARD) to convey crores of MSMEs into the formal monetary system together with avenue distributors and kirana shops.
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The bank card can present short-term working capital loans at low-interest charges and could be additional prolonged to offer collateral-free loans just like the Rs 1 lakh collateral-free facility obtainable to KCC holders, the panel mentioned.
The want for formalising the credit score ecosystem for MSMEs has assumed significance as lower than 40 per cent of 6.34 crore MSMEs, as per authorities knowledge, borrow from the formal monetary system, based on the report. Moreover, the dearth of up to date knowledge on whole MSMEs within the nation and their profile has impacted the sector’s progress.
The final MSME survey was carried out by National Sample Survey Office (NSSO), Ministry of Statistics and Programme Implementation six years in the past whereas the federal government had revised the MSME definition in 2020 to enlarge the scope of the sector by bringing companies with turnover as much as Rs 250 crore underneath the MSME ambit.
“The committee strongly recommend that survey/census of MSMEs in line with the changed definition, be conducted at the earliest so as to estimate the actual number of MSMEs in the country along with realistic assessments of their credit requirements. This survey should be conducted regularly and, in addition, SIDBI can develop a fact-based MSME Annual Financing Report to guide policies and investments,” the panel advised.
Source: www.financialexpress.com”