FM Nirmala Sitharaman to address delay in disbursal of MSME loans
As per news reports finance minister, Nirmala Sitharaman quoted in a meeting with the representatives of the MSME sector that […]
Toshi Tiwari August 7, 2019
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As per news reports finance minister, Nirmala Sitharaman quoted in a meeting with the representatives of the MSME sector that the lack of loan disbursal by banks even after sanctions and long delays in settlement of dues by the government departments and PSUs have undermined the MSMEs’ ability to sustain their business cycles, liquidity-starved micro, small and medium enterprises. The minister’s meeting with MSME representatives is to devise plans for critical sectors amid fears that the economy might be slipping into a protracted slowdown. The minister promised to address the issue of delay in release of dues by the government departments and promised remedial steps to alleviate the difficulties of MSMEs. Ashok Saigal, co-chair of CII MSME Committee stated, “as against sanctioned, only 10% is being disbursed by banks under 59-minute scheme”. Under the scheme, MSMEs registered under the GST are eligible for loan up to `1 crore in just 59 minutes through ‘psbloansin59minutes.com’ portal. The MSMEs also complained that despite 70% guarantee from the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), the firms have not been able to secure loans from banks in many cases. According to reports, another demand by the MSMEs was to revise the turnover/investment-related definition of MSMEs upwards. Rajive Chawla, Integrated Association of Micro, Small and Medium Enterprises of India quoted that the definitions were brought in 2006 and have since become dated due to inflation. Currently a firm with 5 crore investment is classified as ‘small’ while investment over 5 crore are ‘medium’ but machine that cost 5 lakh in 2006 is not valued at 15 lakh,”. It is reported that Sitharaman was positive and she would look into the issue.