The new definition of MSMEs which includes both turnover and investment limits, has made things simpler and will lead to improved flow of credit to the sector, said the Chairman of State Bank of India Shri Rajnish Kumar. Speaking at a dialogue session organised by Confederation of Indian Industry on the occasion of ‘International MSME Day’, Shri Kumar was interacting with various representatives from the MSME industry through a virtual platform. Highlighting the importance of the sector, the SBI Chairman said that they have vast outreach and play a critical role both in terms of economic activity and employment generation.
Mr Kumar was accompanied by Mr Uday Kotak, President CII and MD & CEO of Kotak Mahindra Bank. Speaking on the occasion, Mr Kotak said that MSMEs are not only the backbone of the economy but are a critical part of CII theme for 2020-21 “Building India for a New World: Lives, Livelihood, Growth”. The newly elected CII President said that MSMEs need risk capital to grow and CII would help them in strengthening their ‘internal housekeeping’ so that they can get better access to credit at competitive rates. Mr Kotak said that MSMEs need to be better educated so that they understand how to access formal credit and what are the requirements to access formal credit.
Shri Kumar said that the credit guarantee scheme for MSMEs under the ‘Atmanirbhar Bharat’ will reduce the pain of the sector, which has come under stress in the aftermath of COVID-19 induced crisis. On the issue of financing, he said that SBI is the largest lender to the sector and is increasingly utilising digital technology platforms to enable hassle free credit flow to the MSME industries. Elaborating further, he said GST data, IT returns and analytics help the lender in classifying and disbursing credit and encouraged the enterprises to utilise these platforms as it will help them in getting better access to credit.
On the issue of banks lending to MSMEs, the SBI Chairman said that conservatism, if any on part of public sector banks arises as the MSME sector is relatively more vulnerable and there exists information asymmetry on part of the lender as well as banking professionals at branch level. SBI has taken steps to improve the organisational structure as now across country there are 19 DGMs who have been entrusted with the primary business focus for servicing the MSMEs, as the first contact point.
Addressing the issue, Mr Kotak explained that for private sector banks conservatism arises as they need to safeguard the interest of the depositors, whose trust in the private sector is critical for their functioning. He further added that there are two important things for MSMEs to grow and become integral part of building new India - higher proportion of risk capital and proper governance.
Addressing queries from the participants on the issue of lending under the Rs 3 lakh crore credit guarantee scheme, he admitted that private banks have started a little slow but assured that in the next few weeks there will be significant flow of credit from private sector banks under the scheme both in terms of loans sanctioned and disbursed. On the issue of eligibility under the scheme, he said that in view of the revision in turnover limit for MSMEs from Rs 100 Crore to Rs 250 Core, the eligibility conditions should also be relaxed similarly, and CII would be taking this suggestion to the government. Addressing the participants from the MSME sector, the CII President advised them to not only depend on banks for accessing credit but also look at other avenues like raising private equity or risk capital. He said that such steps will also enable them to get better access to credit from banks at cheaper rates.
Responding to queries, the Shri Rajnish Kumar assured the participants that SBI is focussing on lending to MSMEs and requested them to reach out to the “CHAMPIONS” portal of MSME ministry or to reach out to him in case they face hurdles in accessing credit. On the issue of an authentic database, the SBI Chairman informed that SBI is already working on a “Bharatcraft” portal in consultation with MSME ministry to build a comprehensive database and platform for MSMEs.
Director General CII, Shri Chandrajit Banerjee, while moderating the session reinforced the role of MSME sector in the overall theme of CII and said that the banks are the lifeline of the MSME sector and CII is committed to find solutions for MSMEs. He concluded the session stating that it was not only insightful for the large number of participants from across the country but was also very informative and helpful. He assured that suggestions coming out of this session for CII will be taken up on priority.
27 June 2020