The commercial banks and financial institutions should lend more to the micro, small and medium enterprises (MSMEs) as they are the largest employer in the country after agriculture and they contribute more than 40 per cent of the exports, according to Amit Tripathi, the Deputy Director of the Confederation of Indian Industry (CII) in charge of the online finance facilitation centre of the CII.
He was speaking here on Tuesday morning after the inauguration of the online cell of the CII. He said during the past three months the cell had arranged more than Rs 70 crores of credit to the MSMEs in the country. He said the banks were adopting the bottom-up approach in financing the MSMEs which was not correct. "Any micro or small enterprise seeking credit approaches the manager of a commercial bank and usually the response is not very encouraging. Instead, the initiative to finance the units should come from the top management," he said.
He said many banks were also apprehensive that the credit flow to the MSMEs would contribute to the increase in non-performing assets (NPAs), "but the facts do not bear out such an apprehension". In many cases, the MSMEs also fail to come up with bankable projects for want of technical assistance and other forms of assistance.
For one reason or the other, Tripathi said, there was a huge demand-supply gap in the credit flow to the MSME sector. "It is for this reason that the CII has set up the online finance facilitation centre to advise the MSMEs in getting aid from the banks and also to help the banks in extending credit to the units. It is proving to be of great help country wide and I am sure the MSMEs here will also make use of it," he said.
K.R.K Prasad, the director of MSME Development Institute, Vizag, spoke about the need for credit-rating of the MSMEs and he explained about the various government schemes meant for the MSMEs. He said the MSMEs should also approach the venture capital funds for financing their needs and they should also try the equity route.
Neeraj Sarda, the vice-chairman of the Vizag CII zone, said underfinancing was proving to be a bane for many MSMEs and the banks should realise the fact and be liberal in extending credit.