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Indian MSMEs to get Financial Relief

Jun 02, 2020

With the work flow and operations coming to a complete standstill especially during the lockdown phase the MSMEs are facing the biggest challenge in the wake of the global crisis of COVID 19. However it has now been underlined that the Start-ups and MSMEs are the one of the major players who can effectively work in reviving the nation’s economy. It is in these lines that major financial relief packages and other announcements are being structured by the Government of India with an objective to strengthen trade and commerce. In order to have a greater insight on the financial offerings being extended to the MSMEs World Trade Center Bhubaneswar in association with Start-Up Odisha and National Stock Exchange organized a “Webinar on MSME Financing – The Way Forward”.

Mr. Girish Kumar Meher, Assistant General Manager, SIDBI Bhubaneswar, in his address spoke about the provisions proposed by SIDBI for lending a helping arm to the MSMEs. Referring to the announcements made by the Hon’ble Finance Minister of India, he specifically spoke on three important packages that were meant for MSMEs. The first one being a three lakh crore collateral free automatic loan and a 20% loan towards working capital to all MSMEs based on their bank outstanding as 29 Feb 2020. While mentioning about the second announcement which offers 20,000 crore subordinated debt Mr. Meher shared that the detailed guidelines and modalities for benefiting out of this announcement is yet to come. The third measure is 50 crore equity infusion where the government shall infuse 10 crore into the funds. He also highlighted the redefining of MSMEs which provided scope for more number of enterprises to be eligible to take benefit from the relief measures. He further shared that only the MSMEs with total bank exposure of 25 crore and turnover not exceeding 100 crore shall be eligible for the 3 lakh crore package. He further shared that SIDBI will be extending some loan under this package and that the same will guaranteed by National Credit Guarantee Trustee Company Ltd (NCGTC). “Government is giving corpus fund to NCGTC thus the loan shall be 100% guaranteed under NCGTC and shall be extended without any additional collateral” he said. He also pointed out the 3 lakh crore packages shall be extended on first cum first serve basis up till October 31, 2020 or once three lakh crore funds gets exhausted whichever is earlier. He thus urged all MSMEs should avail as soon as possible.

CA Krishnendu Chanda, Chief Manager, Canara Bank, Bhubaneswar in his address shared his perspective on the financing mechanisms to be adopted by public sector banks and how they are going to support the MSMEs. Speaking on retail banking perspective and how government is trying to help the MSMEs Mr. Chanda cited a positive evaluation of the government schemes which have been announced thereby predicting more out flow of funds from the banks to the MSMEs. He pointed out that the problem with most of the small Indian businesses is that they operate on very thin margins, as they do business locally with reduced competition thus making it difficult for them to survive a significant dip in cash flows. “The government is trying to help them cope with the situation and has announced financial packages, wherein PSU banks are going to play a major role” said Mr. Chanda. He also pointed out that focusing on solving liquidity problems the government is trying to channelize finance through banks hence there is no immediate outflow from the government. “With the current announcement the MSMEs can avail loan and if they fail to pay the loan, the government will step in make good of it hence bankers need not worry about the potential NPAs in MSMEs” he added. “The banks have thus been made enablers for the funds that have been allocated” he concluded.

Mrs. Rachana Bhusari, Vice President, National Stock Exchange limited shared her insights on how the MSME fraternity could get financial assistance through NSE and be benefited by their companies getting listed in the exchange. She also detailed the procedure and norms for getting finance raised through this alternative channel.

Mr. Rajen Padhi, Commercial Director, B-One Limited while pointing out at the GDP figures that has dropped to 4.1%, which is the lowest in 11 years observed that the worst is still to come. Deliberating that the MSMEs are the most vulnerable business class of the Indian economy, he lauded the initiatives of the government of India he urged the large industries and big corporates to extend support to the MSME sector for mitigating their liquidity concerns.

Mr. Prasanta Biswal, Evangelist, Start-Up Odisha his welcome address spoke about the emerging role and importance of MSMEs and Start-ups in the forthcoming times. He emphasized that MSME sector would not only play a vital role in strengthening the Indian economy but will also defuse the unemployment situation which is on the rise. Speaking about the start-up ecosystem he briefed the attendees about the initiatives that start-up Odisha has taken under the administration of Micro Small and Medium Enterprises Department, Government of Odisha. “A lot of start-ups are actually looking at the situation of Post COVID 19 as a big opportunity to innovate and to scale up. We have thus been aggressively working on trying to provide both financial and non-financial grants” said Mr. Biswal. “Start-ups and SMEs are going to be the primary platform for creating jobs for the skilled or semi-skilled masses and the ecosystem has to definitely play a larger role to support them” he added. 

Mrs. Nimeshika Natarajan, Assistant Director, World Trade Center Bhubaneswar proposed the vote of thanks.