Credit Flow to MSMEs Set to Improve in 2-3 Years

A programme on ‘Evolving Modes of MSME Financing’ was organised by MVIRDC World Trade Center Mumbai in association with All India Association of Industries. Mr. Suman Chowdhury, President – Rating Operations, Acuité Ratings & Research Limited said, “There has been a significant decline in the credit ratio i.e. upgrade to downgrade ratio for Acuité Ratings to 1.14 times in FY19 from 1.88 times in FY18. Clearly, the lower proportion of upgrades to downgrades which is expected to continue in FY20, partly reflects the challenges in the MSME sector such as higher working capital requirements due to delayed customer payments, increased funding challenges and the visible signs of a growth slowdown from the second half of FY19.”

However, Mr. Chowdhury expects credit flow to MSMEs improve in the next 2-3 years because of policy measures taken by RBI. “With the growth slowdown and a modest inflation regime, RBI has not only cut rates by 135 bps in the current calendar but is also trying to ensure that such rate cuts are effectively transmitted. We therefore expect to see a significant change in the funding environment both in terms of availability and interest rates over the near term. Acuité believes that with the emergence of the new age digital fintech platforms, funding to the MSME sector particularly trade finance will witness a boost over the next 2-3 years.”

Ms. Rachana Bhusari, Vice President - SME, National Stock Exchange India said, “Currently, more than 200 companies have raised funds through this platform and these companies represent diverse industry base such as media and entertainment, manufacturing, textiles, engineering, finance, chemicals, agriculture, food processing and construction, etc.”

The event was also addressed by other dignitaries epresenting consultancy organisations, financial institutions and startup enterprises.

Mr. Y. R. Warerkar, Director General, MVIRDC World Trade Center Mumbai said, “There is a dire need to promote alternative sources of funding as the MSME sector is stifled due to unmet credit need of Rs. 20-25 lakh crore, according to International Finance Corporation.”

In Photo:

Ms. Rachana Bhusari, Vice President-SME, National Stock Exchange India; Mr. G. Ramachandran, Director, Keiretsu Forum; Mr. Arun Nayyar, Chief Executive Officer, NeoGrowth Credit; Mr. Y. R. Warerkar, Director General, MVIRDC World Trade Center Mumbai; Mr. Suman Chowdhury, President – Rating Operations, Acuité Ratings & Research Limited and Mr. Abhijeet Angane, Senior Vice President and Regional Head - West – Relationship, India Factoring And Finance Solutions.