SME Times News Bureau | 27 Feb, 2020
In a meeting held yesterday chaired by MSME Minister Nitin
Gadkari and Finance Minister Nirmala Sitharaman with senior management of all
Banks, some of the key schemes of Ministry of MSME which generate large number
of jobs with low capital investment were reviewed.
The focus of the meeting was on the Prime Minister’s
Employment Generation Programme (PMEGP), a flagship scheme of the Ministry of
MSME, and Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
In addition, the issue of restructuring of stressed loans to
MSMEs was also discussed to find a way forward to support MSMEs.
PMEGP is a credit linked subsidy scheme which promotes self-employment
through setting up of micro enterprises, where subsidy up to 35 percent is
provided by the Government through Ministry of MSME for loans up to Rs. 25
lakhs in manufacturing and Rs 10 lakhs in service sector.
Both the Union Ministers
commended the work done by the Banks in supporting setting up large number of
enterprises under PMEGP over the past years, which has particularly seen a
two-fold increase in last Financial Year when more than 73,000 micro
enterprises were assisted.
To give further boost to the
scheme, the target in the current year has been increased to support the
establishments of 80,000 units.
In the current year, more than
46,000 units have already been provided with loans by the various Banks and
additionally 22,000 loan applications have also been sanctioned and are
awaiting disbursement.
Banks were requested to release
the loans in such approved cases immediately.
Besides, the Banks were
requested to take up about 1.18 lakh pending loan applications latest by 15th
March, with special emphasis on North Eastern Region (NER).
CMDs of the Banks, while
supporting the scheme, confirmed that they will clear all pending cases by 15th
March.
Data analysis of applications
rejected by Banks revealed that 11% of the proposals are rejected because the
targets given to local banks under PMEGP are met.
To address this issue, Banks
were requested to increase lending under the scheme and revise their policy of
fixing minimum targets so that all eligible applications can be considered for
sanction. Similarly, it was found that 11% of the applications are also
rejected since the applications received by the banks were outside their
service jurisdiction.
Accordingly, Banks were also
asked to devise a mechanism whereby such application can be automatically
transferred to other appropriate branches in the area.
A simple procedural change will
now ensure that these applications will get considered on merit instead of
being rejected summarily. The endeavour of the government is to grant a fair
opportunity to every aspiring entrepreneur.
Discussions were also held with
Banks on increasing the reach of Credit Guarantee scheme. Government has set a
target of increasing credit guarantee to Rs. 50,000 crores under this scheme,
which is a jump of about 67% over the last year.
The Banks brought out that there
is a huge demand under this scheme and they are confident of achieving this
target.
One of the major challenges
faced by MSMEs is in restructuring stressed loans due to sector related
problems or issues with the large industries to which they supply.
Finance Minister and Minister
of MSME emphasised upon the need for providing support to the MSMEs by suitably
restructuring the stressed loans at an early stage.
All CMDs agreed to support
MSMEs in restructuring their stressed loans. Further they confirmed that in
accordance with the Budget announcement, the cut-off date for restructuring of
loans to MSMEs has been already extended up to 31st December 2020.
The meeting concluded with the optimism that
these initiatives taken for the MSME sector will go a long way in providing
support to the sector, thereby increasing employment opportunities.
The meeting with Bankers clearly indicates the
resolve and efforts of the Government in supporting the MSME sector which is
the backbone of the economy.