Rs 5,000 crore fund to bridge MSME credit gap | SupportBiz

Finance Forum

Rs 5,000 crore fund to bridge MSME credit gap

In a recent development, the Ministry of MSME, Government of India, declared its intention to work aggressively towards the creation of an ‘India Inclusive Innovation Fund’. This new fund will cater to the credit requirements of Indian MSMEs.

Speaking about the  fund, Vivek Rae, Secretary, Ministry of MSME,  stated that the  fund will be worth Rs. 5,000 crore. “To begin with, a corpus of Rs. 500 crore would be set aside for the fund, of which the government would put in Rs. 100 crore, while the balance would be contributed by banks and financial institutions. The scheme, which would be operationalized within three months, would take equity stake in companies at the bottom of the pyramid and promote venture capital among MSMEs,” Rae said, while inaugurating CII’s Conclave on Credit and Finance for MSMEs in the national capital.

NK Maini, Deputy Managing Director,  SIDBI, spoke about an existing gap of about Rs. 7 trillion   in MSME  financing, as reported by the IFC Report.  “It will be through both  traditional and non-traditional modes of finance that the gap  will be filled. SIDBI, as the apex financial institution for  MSMEs,  is committed to help bridge this gap,” Maini stated.

Expressing his concern, Rae  said, “Despite  detailed guidelines  from RBI to banking institutions on dispersal of credit to MSMEs, these units  face  different behaviour and a sort of financial exclusion from the banking system. This is a big challenge for entrepreneurs who want to run their small businesses successfully. I would like to urge banks for an increase in the penetration of MSMEs in the banking system.  There has to be  a strong accountability  towards assuring MSMEs utilization of credit.”

CK Mishra, Joint Secretary, Ministry of MSME, Government of India, highlighted the role of banks and rating agencies and reiterated the commitment of the Ministry of MSME for facilitating the availability of credit  and finance for MSMEs. Mishra added, “It is very important for all stakeholders in the MSME sector to come together  on a common platform. The bankers have to play a very important role in achieving this.  Efficient implementation and monitoring of the existing guidelines shall improve the scenario for  MSMEs.”

With regard to catering to the credit needs of Indian MSMEs, the National Stock Exchange (NSE) has also come up with a dedicated program.  Ravi Tyagi, Head of SME Project,  NSE, says, “I am confident that the SME platform will fulfil the long-pending need for raising equity finance for  SMEs. However, it is very important for SMEs to have a clear understanding about raising funds through  such schemes. I think, CII, along with NSE and SIDBI, can not only work towards streamlining the guidelines for this, but  can also  enhance the appeal of raising funds from the primary markets by the SMEs.”