MSMEs Bounce Back With Normalising Repayments

Small Industries Development Bank of India (SIDBI) Chairman and Managing Director Sivasubramanian Ramann has reported said that Indian MSMEs have bounced back with repayments coming back to normal virtually.

Speaking with a leading daily, he said, “MSMEs have bounced back. Repayments have virtually come back to normal. In the smaller units that employ limited people bad loans are likely to show up. In the micro segment, the total loan exposure is less than INR 5 crore. We need to provide additional benefits to this particular segment. Larger entities showed tremendous resilience.”

He said that interventions made by the government under Emergency Credit Line Guarantee Scheme (ECLGS) has allowed credit flows to micro, small and medium enterprises that were struggling during the pandemic. Those entities received nearly INR 3.5 lakh crore credit. This move has prevented all of them from slipping into the non-performing asset category during the pandemic. A greater amount of handholding came from the combined efforts of the RBI and the government.

Speaking about the technology change in the sector, he said, “Today we are entirely digital. We are encouraging our officers to take their laptops to help customers fill in their details for loan applications. We run algorithms to assess businesses. Our credit appraisal system flows into fully digital. Our disbursements are now entirely digital. It is a central disbursement.”

The SIDBI chairman said that they had given sanctions to over 80 Alternative Investment Funds (AIFs), which in turn invested about 700 companies. So, the amount of funds sanctioned is about INR 7,200 crore. This has to go over a period of time. No company wants money in large doses. Money is always released in tranches. You are given a four to five-year period in which you deploy the funds. We will see an increase in the disbursement rate going forwards.

Meanwhile, BB Swain, Secretary, Ministry of Micro, Small & Medium Enterprises said that almost 96 lakh MSMEs have been registered on Udyam portal in the last two years with an employment of 7.34 crore.

Speaking at the MSME Conclave organised by EEPC India, Swain said there was tremendous potential for Indian engineering MSMEs to be integrated into the global value chain (GVC) given the manufacturing cost advantage in India.

Highlighting that marketing is one of the most important aspects in ensuring that MSMEs regain their ground, the Secretary said that the Ministry was working on creation of a database on Global Market Intelligence System.

Speaking at MSME Conclave organised by EEPC India, Swain noted the role of engineering goods sector in exports and stated that it is one of the largest industrial sectors in India in terms of turnover, exports, total factories and foreign collaborations.

He said that MSMEs engaged in manufacturing of engineering products are about 29% of the 96-lakh registered MSMEs on the Udyam registration portal.

“I see tremendous potential in further growth of this sector and am certain that this will definitely lead to substantial employment generation, and that is something that the Government of India has been focusing on, especially in the post-pandemic era,” he said.

“What is noteworthy is that amongst these 7.34 crore, the employment generated for women is more than 1.68 crore,” he noted.