Economy

MSME Ministry working on certification of credit worthiness of small businesses

Amiti Sen New Delhi | Updated on April 03, 2018 Published on April 03, 2018

Facility will be part of National Enterprise portal for MSMEs to be launched soon

To help small businesses borrow from banks, the Ministry of Micro, Small and Medium Enterprises (MSME) is working on a portal that will certify the credit worthiness of small players based on certain identified parameters which can be submitted to banks when loans are applied for.

“The MSME sector often complains that banks do not give them loans easily and they are made to run from pillar to post. Our endeavour would be to rate the credit worthiness of a proprietor or firm based on certain criteria and after doing due diligence and then generate a certification for them. If banks do not give loans to MSMEs with a good credit certificate, they could be hauled up and asked to explain,” a senior government official told BusinessLine.

The official further explained that retail banks often approached individuals for loans after examining certain pre-determined criteria which ascertained the credit worthiness of the individual. “These criteria could be anything ranging from the previous loan repayment record of the individual to the assets possessed. However, in the case of MSME, banks often ignore positive factors going in favour of the loan seeker and dilly dally in sanctioning credit,” the official said.

The Ministry of MSME, therefore, believes that it could help in the initial screening of the loan seekers after getting them to submit information on some pre-determined parameters. “We are working on the criteria on the basis of which credit worthiness would be determined,” the official said.

The facility would be provided in the National Enterprise portal being designed by the Ministry of MSME which would serve as an interface for the small industry to interact with other Ministries and the outside world.

“The portal will be convergence driven. The Ministry of MSME is an aggregating ministry. So many other ministries do MSME related work. The idea is to get everyone together,” the official said.

Out of a total outstanding credit of ₹26,04,100 crore as on November 2017, just 17.4 per cent went to MSMEs, according to the Economic Survey 2017-18. The share is disproportionately small given the fact that the share of MSME sector in the country’s Gross Value Added (GVA) is approximately 32 per cent.

Published on April 03, 2018

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.