The Hindu Business Line : ‘Micro, small units can adopt mutual credit guarantee model’

Chennai, June 6 Indian micro, small and medium enterprises can learn from the Italian experience and beneficially adopt the ‘mutual credit guarantee scheme’ model, says Mr Bruno Valanzuolo, Chief Technical Advisor (Consolidated Project for SME development in India) of UNIDO.

MCGS members raise bank loans without offering collateral security because the association itself stands guarantee to the borrowings.

There are several thousands of MSMEs in the country that, in spite of having potential for growth and sound ideas, have difficulties in mobilising financial resources to implement their projects. For them mutual credit guarantee is an advantage as the Ministry of MSME encourages promotion and setting up of MCGS amongst MSMEs so that they grow significantly by leveraging emerging opportunities.

At a seminar on ‘MCGS – The Italian Experience’, organised by the CII Southern Region and UNIDO, Mr Valanzuolo said the UNIDO consolidated project for SME development is financed by the Italian Government. The project identified auto components, leather and footwear as key sectors for co-operation.

Projects identified

To take this project further, CII Southern Region and UNIDO have signed a co-operation agreement to help MSMEs in auto components, leather and footwear industries. Alongside, UNIDO has also opened an Investment and Technology Promotion Office (ITPO) at CII Southern Region headquarters to promote foreign direct investment, transfer of technology and SME development through various activities such as creating sub-contracting exchange for MSMEs and matchmaking the buyers with sellers.

Sharing the Italian experience Mr Giorgio Guarena, General Manager of Unionfidi, a MCGS organisation in Italy, said, “Relationships between MSMEs and banks have always been problematic due to lack of equity, suitable guarantee and information. The only way out is MCGS.” His company has a membership of over 11,000 MSMEs and processes about 4,000 applications for offering loans through MCGC.

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