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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.
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