Monday, November 24, 2014: Union MSME minister Kalraj Mishra showed his concern that credit amount which is flowed towards the MSME sector is not sufficient enough. He said that banks are not willing to sanction loans to budding as well as established entrepreneurs in the sector.
Entrepreneurs are facing huge difficulties while looking for loans from banks, Mishra said at an Assocham event in the Capital of India. He said, this kind of behaviour on the banks’ part is causing huge disappointment for MSME sector’s aspirants and the banks are not even following RBI guidelines. The union minister told PTI that he has formally written to the finance ministry and is currently awaiting a response from them. He also said that his ministry is ready to take any responsibility and other state governments have also been asked for Credit Guarantee Fund Trust. Funds are collected to ensure that banks will be no more able to heckle entrepreneurs in the sector and they should convey all kind of difficulties directly to the ministry.
Credit Guarantee Fund Trust was set up by Ministry of MSME, Government of India and SIDBI for micro and small enterprises so that credit is flown to the sector smoothly, without any need for collaterals and third party guarantees. As instructed by RBI guidelines, banks are not supposed to accept any collateral security if the loan is up to Rs 10 lakh for any unit in the MSME sector. The limit can also be increased if an MSE unit has the reputation of a good financial position and also holds good track record. In such cases the limit can be increased to Rs 2,500,000, with proper approval.
Now the ministry is trying to simplify the process of filing entrepreneurs’ memorandum or EM through an online registration system. The new manufacturing policy of the government aims to boost the share of manufacturing in GDP to 25 per cent in next ten years and 100 million jobs are also aimed to be created in the sector.
