NEW DELHI: The Union government is looking at ways to increase equity investment in micro, small and medium enterprises (MSMEs) and increase financing opportunities for them, especially in the informal sector.
At a meeting on Monday, the Union MSME Ministry, the Department of Financial Services under the Ministry of Finance, and industry bodies representing MSMEs discussed these issues.
“The meeting discussed deepening equity financing to MSMEs through the SRI Fund (Self-Reliant India) and increasing financing to companies in the unorganized sector,” the official said, expressing concern over the developments and adding that the SRI Fund He added that investment from China has not progressed much. High as expected.
Questions sent to MSME and the Ministry of Finance remained unanswered till the time of writing.
SRI Fund was established in 2020; INR50,000 billion corpus, of which INR$10.06 billion will come from the center and the rest from private or venture capital funds. Last month, the Ministry of MSMEs tweeted: INR759.3 billion has been pumped into 425 MSMEs in the last three years. Additionally, his 51 daughter funds, which are alternative investment funds, operate under his NSIC Venture Capital Fund (NVCFL).
NVCFL, which operates as the mother fund of SRI funds, was registered as a Category II Alternative Investment Fund (AIF) in 2021.
The departments also discussed the need for a new credit guarantee system, as well as standardizing the procedures of the current guarantee system.
Credit guarantee schemes have become a means of securing liquidity for these small and medium-sized enterprises, which have been hardest hit by the pandemic and the suspension of monetization. In 2020, the government also launched the Emergency Credit Facility Guarantee Scheme to help stressed businesses access more loans backed by sovereign guarantees.
The Government is currently considering the need for new credit guarantees for this scheme and the standardization of processes across these different schemes.
The Federation of Indian Small and Medium Enterprises (FISME), in its recommendations to the ministry, said certain credit guarantees could be promoted to soften lenders’ risk perception based on gender, social, regional, class, age and educational biases. He said there is. .
The introduction status of bank loans for micro enterprises and small and medium enterprises is as follows. INR6.33 trillion as of March 24, 2024, and that of medium-sized companies. INR2.68 trillion, according to preliminary data for April released by the Reserve Bank of India on Tuesday.
On Monday, central government ministries also discussed the digitization of financial transactions of these small and medium enterprises, mainly in the organized sector. Focused on increasing usage of digital public infrastructure platforms such as account aggregators, GSTN and GST Sahay.
They have adopted digital platforms such as e-KYC and ‘digilockers’ to streamline the onboarding process of MSMEs for availing various financial services, as well as providing information on the registration process, commonality of various government schemes. Focused on developing a common platform for sharing documents.
Industry stakeholders are being asked to submit recommendations and suggestions in the coming days.
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