Parliamentary Panel for MSME Finances

Parliamentary Panel for MSME Finances

News: Recently, the Parliamentary standing committee on finance has suggested several measures for strengthening credit flow to the Micro, Small and Medium Enterprises (MSMEs) sector.

Suggestions made by the Panel:
• Developing the Udyam portal into a one-stop central data repository for the MSME sector by linking it with other databases such as CIBIL data, utility bills data etc. At the moment it is linked with Government emarketplace (GeM), Income Tax, GST and Trade Receivables Discounting System (TReDS) portal.
• Survey/census of MSMEs in line with the changed definition, be conducted at the earliest so as to estimate the actual number of MSMEs in the country along with realistic assessments of their credit requirements.
• Creating a ‘Unified Payments Interface (UPI) for MSME Lending’ for all MSMEs in the formal sector to access small-ticket working capital loans in a mobile-based, contactless, paperless, and low-cost way.
• The panel also recommended a ‘Vyapar’ credit card scheme for MSMEs under SIDBI akin to the Kisan Credit Card (KCC) scheme of the National Bank for Agriculture and Rural Development (NABARD) to bring crores of MSMEs into the formal financial system including street vendors and kirana stores.

Need to improve Credit Flow to MSME Sector?
• Lack of Formalization is the primary concern. Less than 40% of 6.34 crore MSME’s, as per government data, borrow from the financial system.
• The committee noted that whatever data is there with regard to the MSME sector, they exist in a fragmented manner and there is no real integration across multiple datasets. Thus, banks are reluctant to lend to the MSME sector.
• The last MSME survey was conducted by National Sample Survey Office (NSSO), Ministry of Statistics and Programme Implementation six years ago while the government had revised the MSME definition in 2020.

Government initiatives:
• Prime Minister’s Employment Generation Program
• Scheme for regeneration of Traditional Industries (SFURTI)
• A scheme for Promoting Innovation, Rural Industry and Entrepreneurship (SFURTI)
• Champions Portal
• Udyam Registrations Portal
• MSME Sambandh