Addressing the financing challenges faced by the micro, small, and medium enterprises (MSME), Union Minister for Commerce and Industry, Piyush Goyal said the government is open to the idea of alternate financing model.
Minister Goyal further urged the industry to share specific issues they are facing in accessing bank credit, and said, “If we get that more specific feedback then we will be able to take it up with the bankers.”
He also said that in order to support MSMEs, the government is willing to earmark areas in the 20 townships being built across the nation.
Land at concessional rates for MSMEs
Stating that MSMEs are pivotal to supporting large industries in their ecosystem, the Minister noted that he would speak to States to look at providing areas to MSMEs for developing their businesses in townships and industrial parks.
He also added that MSMEs can be provided land at concessional rates to develop their businesses in the townships.
Goyal also talked on setting aside areas for MSMEs in industrial townships, and said, “I am happy to commit to a particular area earmarked for MSMEs because without MSMEs no large industries will survive.”
“If Toyota is investing Rs 20,000 crore in one of our industrial cities at Shendra-Bidkin at Sambhaji Nagar (Maharashtra), clearly they will need 100s of MSMEs in their support ecosystem,” he said.
Bank credit to MSMEs
A recent data from the Reserve Bank of India has said that the bank credit to MSMEs under priority sector lending in October surged by 13.9% to Rs 26.34 lakh crore from Rs 23.11 lakh crore in October 2023.
Finance Minister Nirmala Sitharaman at an event in November had noted that Rs 100 crore credit guarantee scheme for MSMEs announced in the budget will soon be placed before the Union Cabinet for approval.
However the exporters have raised concerns over declining bank credit, particularly to the MSME segment.
They claimed that while exports grew by 15% in the rupee terms between 2021-22 and 2023-24, the outstanding credit in March 2024 dropped by 5% over the same month in 2022.
Further, as per a report, finance ministry has directed the public sector banks (PSBs) to launch the credit risk assessment model for MSMEs with a loan amount between Rs 25 lakh and Rs 5 crore to be assessed by the model for different banks.
