Need MSME specialised banks: Muniyappa
Minister of State (Independent Charge) for Micro, Small and Medium Enterprises, K. H. Muniyappa on Wednesday said prominent banks should set up MSME specialised branch in every district in eastern and north-eastern India to address finance related issues of MSME units.
"Within 3 months, prominent banks should setup at least 1 MSME specialised branch in every district to Eastern and North-Eastern India to address finance related issues of MSME units," Muniyappa said while addressing at the National Conference on MSME Financing and Strengthening MSME Linkages here.
"Alongside, concerted efforts should be made to assist MSME in increasing scalability and performance, which will eventually help in increasing export and GDP of the country," he added.
The two-day conference was organised by the Indian Chamber of Commerce (ICC) in collaboration with Department of Micro and Small Scale Enterprises and Textiles, Government of West Bengal.
The conference aimed to bring all stakeholders in a same platform and create linkages for fostering growth and development.
The conference, termed as "Knowing Each Other", which will continue till July 25, is a part of the initiative undertaken by the GoWB, a 5-day 'MSME Business Conclave' to be organized in Kolkata from September 12-16 .
The Conclave will have 'Vendor Development and Ancillarisation' as one of the key themes to be organised by the Indian Chamber of Commerce on September 16.
Addressing the inaugural session of the conference, Muniyappa spoke on the vital roles that the MSME sector plays in developing the economy in terms of GDP growth, employment generation and surging up the export.
The sector employs over 8 crore people through 3.6 crore enterprises producing over 6000 commodities.
He said that the role of the sector in fulfilling the national objectives of growth with equity and financial inclusion is unquestionable. By contributing 8pc of national GDP, 45pc of manufactured outputs and 36pc of export, the sector plays as a nursery of entrepreneurship and is recognized as the engine of growth by the central government.
To ensure better credit flow aiming at success of the sector, he mentioned that the Government is implementing Credit Guarantee Scheme, where guarantee cover up to 85pc on collateral free credit facility will be extended by financial institutions. Under this scheme, 11 lakh proposals have been approved and Rs. 54332 crore has been sanctioned till April '13.
By implementing the Prime Minister's Task Force recommendations on setting up dedicated Stock Exchange to raise equity capital, the Minister expressed his confidence that two operational Stock exchanges can provide access to capital and wealth creation for all stakeholders.
With a plan to increase the export and international acceptability of the MSME generated products, he stressed on undertaking more R and D initiatives which are expected to develop the acceptability and promotion of products.
An amount of Rs. 24000 crore has been disbursed by the central government as Development Fund, aimed at developing the infrastructure, R and D and developing export orientations of different firms.
He also stressed on boosting the technological capabilities of the MSMEs. Speaking in this line, he said that to enhance the competitiveness of Indian manufacturing industry, the National Manufacturing Competitiveness Program will directly boost the entire value chain of the sector.
To address the issues of technological up-gradation, the ministry is implementing Credit Linked Capital Subsidy Scheme (CLCSS) which provides 15pc capital subsidy on Institutional loans up to Rs. 1 crore availed by MSMEs.
Speaking in the lines of achieving procurement goals, he announced that a new Public Procurement Policy 2012 will mandate central government departments and PSUs to procure at least 20pc of MSME products, of which 4pc should be from SC/ST entrepreneurs.
He announced that the Ministry is targeting to train 1.5 crore people by 2022 and more than 40 lakh during 12th FYP, through making use of state-of-art tool rooms and Technology Development Centers.
During his address, Muniyappa appealed the CMDs and EDs of banks to setup at least one MSME Specialized branch in every district of the Eastern and North-eastern part of the country within the next 3 months. The branches should focus on delivering financial assistance and customised products to the MSME units by undertaking simplification of existing norms.
He concluded his remarks hoping that clustering, concerted focus on R and D and properly using the resources as well as materials are expected to grow to sector immensely in near future.
K V Srinivasan, CEO, Reliance Commercial Finance, during his address, spoke on some of the key issues of the sector along with highlighting on the possible solutions.
He said that majority of the MSMEs fail to survive after 3-5 years from the day of commencement; those which survive fails or finds tremendous difficulty in upsizing themselves to large industries.
He suggested that addressing the issue of skill development will help. In this regard, the effectiveness of organising Skill Development Programs comes into play. He suggested that creating customised management programs and delivering advisory services will address the issue.
Another problem is the access to formal finance, where only 7pc of MSME units have access to that. More penetration, simplification of clauses and delivering customised financial products to the MSMEs will address the issues, said Srinivasan.
Given the fact that concentration of MSMES are higher in semi-urban areas, he felt that the banks and financial institutions should shift focus from Tier I cities to Tier II and III cities (semi-urban and rural areas).
For increasing acceptability and promotion of MSME manufactured products, lack of marketing capabilities need to be addressed by the concerned departments. Alongside, more advertising and brand creation will lead to increasing the acceptability of the products nationally and globally.
R K Dubey, CMD, Canara Bank said that Canara Bank is doing its best to address finance and related issues of MSMEs. The bank has shifted its focus on less developed areas, where the concentration of MSMEs is much high.
The bank has created customised products for the MSMEs and is providing loans with a low interest rate. However, he felt that more efforts should be made to launch new and customised products, which in turn will help MSMEs grow financially.
Speaking on financial literacy, he said that Canara Bank has flagged off a project under the banner "Finance Literacy and Credit Counseling Centers" (FLCC), which are aimed at increasing the financial literacy amongst people involved in MSME productions and also provides assistance through advisory and consultancy to them.
Even though the project is limited to a few places of Kerala and south India, it is planned to extend the project to all states of the country. He also said that cluster based schemes are being developed by the bank.
The two-day conference, majorly supported by Canara Bank, State Bank of India and Reliance Commercial Finance, witnessed a whopping participation of relevant stakeholders, bankers, big industries, micro small and medium scale entrepreneurs and others. The second day of the conference will have a special B2B session where Memorandum of Understanding (MoUs) will be signed between industry big tickets and MSMEs.
(Posted on 24-07-2013)