RBI addresses the concerns of MSMEs in Jammu Kashmir

The Reserve Bank of India’s (RBI), 62nd Empowered Committee meeting, chaired by Regional Director Chandra Shekhar Azad on Micro, Small, and Medium Enterprises (MSMEs) for the Union Territories of Jammu & Kashmir and Ladakh, deliberated on crucial matters impacting the MSME sector.
Key issue faced by MSMEs, is of funding with shaky Cibil Scores and lack of collateral, and it was opined by the officials that the bank branch managers should assess the actual position of an MSME and be allowed to take calculated risk.

However, it’s been noted that the government is looking to strengthen the underwriting model for micro, small and medium enterprises (MSMEs) in order to make it easier for them to access loans across states. Underwriting is the process of evaluating risks to protect the interests of banks and other lenders. The development is aimed at lowering defaults by MSMEs and increasing financing for these smaller businesses, felt the Regional Director.

It was also brought to the notice that, sovereign guarantees provided by the government under schemes like the emergency credit line guarantee scheme (ECLGS) have supported covid-hit MSMEs get loans. Additionally, a credit guarantee fund is there to ensure funds for small businesses.

Discussing further the officials felt that it’s important to conduct sessions of financial discipline and proposed awareness on topics such as Udyam registrations, Treds platforms, and startup funding schemes in educational institutions. The officials also recommended introducing a funding product for solar plants with easy and affordable EMIs, enhancing accessibility of the RBI Ombudsman department, and involving industry associations in NPA discussions before declaring an MSME as an NPA.

Chander Shekhar Azad extended his congratulations to the attendees and assured them that their concerns would be addressed. He appreciated the contributions of Industry and others in organizing informative programs and serving as a bridge between the government and entrepreneurs for policy advocacy.