Loading...

⚠ โœ•
❮ Top
☎ Help
Draft upto 3 replies to a
tax notice โ€” FREE ๐ŸŽ‰ โœ•

150 credits ยท 30 days

โ€ข Basic Search โ†’ 1 Credit
โ€ข Advanced Search โ†’ 3 Credits
โ€ข Drafter โ†’ 20 to extract + 25 per issue
(โ‰ˆ upto 2-3 drafts on us)

Already used our earlier 20-Credit Demo?
You are still eligible for this new 150-Credit Demo.

Activate your FREE Demo โ†’
☰
×

By creating an account you can:

Logo TaxTMI
Call Us / Help / Feedbackโœ•

Contact Us At :

✉ E-mail: [email protected]

✆ Call / WhatsApp at: +91 99117 96707

For more information, Check Contact Us

FAQs :

To know Frequently Asked Questions, Check FAQs

Most Asked Video Tutorials :

For more tutorials, Check Video Tutorials

Submit Feedback/Suggestion :

Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters 0/2000
Make Most of Text Search โœ•
  1. Checkout this video tutorial: How to search effectively on TaxTMI.
  2. Put words in double quotes for exact word search, eg: "income tax"
  3. Avoid noise words such as : 'and, of, the, a'
  4. Sort by Relevance to get the most relevant document.
  5. Press Enter to add multiple terms/multiple phrases, and then click on Search to Search.
  6. Text Search
  7. The system will try to fetch results that contains ALL your words.
  8. Once you add keywords, you'll see a new 'Search In' filter that makes your results even more precise.
  9. Text Search
โ•ณ
Add to...
You have not created any category. Kindly create one to bookmark this item!
โœ•
Create New Category
Hide
Title :
Description :
❮❮ Hide
❮ Default View
Expand ❯❯
Close โœ•
🔎 Filters / Advanced Search ❯
TEXT

Press 'Enter' to add multiple search terms. Rules for Better Search

Search In
Main Text + AI Text ❯
  • Main Text
  • Main Text + AI Text
  • AI Text
Category: ?
Categorized by AI
---- All Categories ---- ❯
  • ---- All Categories ----
  • Income Tax
  • GST
  • Customs, DGFT & SEZ
  • FEMA & RBI
  • Corp. Laws, SEBI & IBC
  • PMLA, Black Money & ED
  • Budget
  • News and Press Release
  • PTI News
Month:
---- All Months ---- ❯
  • ---- All Months ----
  • January
  • February
  • March
  • April
  • May
  • June
  • July
  • August
  • September
  • October
  • November
  • December
Year:
---- All Years ---- ❯
  • ---- All Years ----
  • 2026
  • 2025
  • 2024
  • 2023
  • 2022
  • 2021
  • 2020
  • 2019
  • 2018
  • 2017
  • 2016
  • 2015
  • 2014
  • 2013
  • 2012
  • 2011
Sort By: ?
In Sort By 'Default', exact matches for text search are shown at the top, followed by the remaining results in their regular order.
Relevance Default Date
    DRI seizes 10,000 kg of firecrackers worth Rs. 3 crore at Nhava Sheva port
    CCI approves acquisition of certain additional equity share capital of IIFL Capital Services Ltd by FIH Mauritius Investments Ltd.
    CCI approves acquisition of Onesto Labs Private Limited by Lโ€™Orรฉal India Private Limited
    Central govt employees to get salary in advance on Sep 25 in view of 3-day bank strike
    BharatBenz Inaugurates Indiaโ€™s Highest-Altitude Workshop at Leh-Ladakh in Collaboration with PPS Trucking
    KRAFTON India Brings the Final BGMI Redeem Code Drop on September 23 with the Golden Miramar - Pan
    Sikkim govt to introduce Aadhaar-based biometric attendance for employees from Oct 1
    Swastika Infra Limited Announces Launch of Initial Public Offering
    S&P, Fitch, others raise FYโ€™27 India GDP growth projections; see RBI rate hike on inflation fears
    Centre for Trade and Investment Law Hosts Webinar on WTO Fisheries Subsidies Agreement
    Banks to remain open on Sunday, 27th September, for convenience of customers
    CGPSC scam: ED alleges Rs 45 lakh 'CSR' payment to ex-CGPSC chief for favouring businessman's kin
    Banks to remain open on Sunday for customers' convenience in view of proposed strike
    S&P, Fitch raise FY'27 India GDP growth projections; see 25 bps RBI rate hike on inflation fears
    ADB raises India's GDP growth forecast to 7pc on stronger-than-expected Q1 growth
    Hughes Precision Raises โ‚น250+ Crore to Accelerate Ammunition Manufacturing Expansion
    Fitch raises India's FY'27 GDP growth projections to 6.9 pc
    ED searches against entities involved in IBC process for Kolkata company
    Union Minister Shri Piyush Goyal Interacts with Industry Stakeholders on Ease of Doing Business, FTA Opportunities and Trade Reforms Workshop
    S&P raises India's FY27 GDP growth forecast to 7pc, sees 25 bps RBI rate hike
❮
❯
❯❯
Maximize Maximize Maximize
0 / 200
Expand Note
Add to Folder

No Folders have been created

+

Are you sure you want to delete "My most important" ?

NOTE:

News
Showing Results for :
Reset Filters
Results Found:
Show All Summaries Hide All Summaries
September 24, 2026
Show AI Summary
Restricted firecracker imports concealed through misdeclaration trigger seizure and criminal investigation under customs enforcement law.
Concealment of restricted firecrackers within an import container declared as bottles and wallpaper resulted in customs seizure under the Customs Act, 1962. Firecracker imports are restricted under the Foreign Trade Policy and require valid Directorate General of Foreign Trade authorisation and a Petroleum and Explosives Safety Organisation licence under the Explosives Rules, 2008. Investigation into attempted clandestine clearance led to the arrest under the Customs Act of a key syndicate member alleged to have orchestrated the import.
September 24, 2026
Show AI Summary
Merger-control approval permits FIHM's phased acquisition of IIFL Capital Services equity through subscription, open offer and promoter purchase.
Merger-control approval permits FIHM to acquire certain additional equity share capital of IIFL Capital Services through a preferential issue on a private-placement basis and through shares tendered in a mandatory open offer. FIHM may also buy shares from the target's promoters if its aggregate shareholding with HWIC remains below the Target Shareholding after these steps.
September 24, 2026
Show AI Summary
Full ownership acquisition in beauty and personal care receives competition approval for skin care and hair care operations.
Competition approval covers L'Ore al India Private Limited's acquisition of the entire shareholding in Onesto Labs Private Limited. The proposed combination concerns India's beauty and personal care sector and places the Target under the Acquirer's full ownership. Both entities operate in beauty and personal care products, including skin care and hair care.
September 23, 2026
Show AI Summary
Advance disbursement of central government pay addresses anticipated banking disruption, with subsequent adjustment against the following month's entitlements.
Advance disbursement of September 2026 salary, wages and pensions is authorised on 25 September for central government employees, industrial employees and pensioners because of the proposed bank strike. Payments constitute advance payments and must be adjusted after full monthly entitlements are determined, with any adjustment made from October salary or wages. End-of-month banking transactions should, where feasible, be processed in advance.
September 23, 2026
Show AI Summary
Commercial vehicle after-sales support expands authorised repairs, genuine spares, roadside assistance, and uptime for remote high-altitude fleet operations.
Commercial vehicle after-sales support is expanded through a BharatBenz 3S facility operated by PPS Trucking for remote high-altitude fleet operations. The facility provides sales, authorised service, genuine spare parts, diagnostic systems, repair tools and round-the-clock roadside assistance. Trained technicians, service bays and regional spare-parts inventory are intended to reduce repair turnaround times and vehicle downtime. The support network serves commercial vehicles engaged in stone-crushing, road construction, communication-infrastructure transport and other heavy-duty operations in difficult terrain.
September 23, 2026
Show AI Summary
Redeem-code eligibility limits govern BGMI's final Golden Miramar Pan reward drop through the official redemption portal.
BGMI's final redeem-code series offers limited-time Golden Miramar - Pan rewards through general redeem codes valid only until September 25 on the official redemption website. Redemption requires a Character ID, valid code, Captcha verification, and submission through the redeem centre. Each code is limited to 10 users on a first-come, first-served basis; users may redeem one code daily, and each code is usable once per account. Guest accounts are excluded, and in-game mail rewards must be claimed within 30 days.
September 23, 2026
Show AI Summary
Aadhaar-based biometric attendance requires employee registration, integrates leave records, and triggers automated pay deductions for unauthorised absences.
Aadhaar Enabled Biometric Attendance System (AEBAS) is mandatory for regular and temporary government employees and integrates attendance and leave data with PRANALI. Monthly reports are verified to identify authorised leave and net absence. Remaining unauthorised absence may result in digitally issued extraordinary-leave or leave-without-pay orders, personnel-record updates, and automated salary deductions. Temporary employees' failure to record attendance is treated as leave without pay.
September 23, 2026
Show AI Summary
Initial public offering by Swastika Infra combines a fresh issue and offer for sale, subject to approvals.
Swastika Infra Limited proposes an initial public offering comprising a fresh issue of equity shares and an offer for sale, with proposed listings on BSE Limited and National Stock Exchange of India Limited. The allocation framework covers qualified institutional buyers, anchor investors, non-institutional investors and retail individual investors. Net fresh-issue proceeds are intended for incremental working-capital requirements and general corporate purposes. Completion remains subject to statutory and regulatory requirements, approvals, market conditions and other considerations.
September 23, 2026
Show AI Summary
Monetary policy tightening may follow resilient growth as inflation, conflict risks, and weather pressures reshape economic projections.
FY27 GDP growth projections were raised to a range of 6.9%-7.1% on stronger June-quarter activity, resilient demand, investment, consumption, exports, capital inflows and limited supply disruptions. Growth may moderate as energy costs reduce purchasing power, activity slows and weather risks persist. Policy-rate tightening is projected as an inflation response, with forecasts of a 25-basis-point increase and temporary rate rises to offset price pressures.
September 23, 2026
Show AI Summary
Fisheries subsidy disciplines require transparent reporting, domestic monitoring, and coordinated implementation to address harmful subsidies and IUU fishing.
Fisheries subsidy disciplines target support linked to illegal, unreported and unregulated fishing, fishing of overfished stocks subject to rebuilding conditions, and fishing on the unregulated high seas. Members accepting the Agreement must implement and administer these disciplines and comply with notification and transparency obligations. Effective implementation depends on reliable fisheries data, monitoring and reporting systems, vessel registration, inter-agency coordination and technical capacity.
September 23, 2026
Show AI Summary
Essential banking service continuity requires Sunday operations by public sector and regional rural banks during the proposed strike.
Public Sector Banks and Regional Rural Banks will function normally on Sunday, 27 September 2026, to prevent an extended interruption to public banking needs during the proposed nationwide strike. Reserve Bank approval covers full operation of branches, offices, ATM-link branches and Currency Chests, alongside measures intended to maintain uninterrupted essential banking services.
September 23, 2026
Show AI Summary
Money laundering allegations in public recruitment describe CSR-linked payments, examination manipulation, and candidate payments treated as proceeds of crime.
Money-laundering allegations concerning state public-service examinations identify two alleged streams of proceeds of crime: corporate social responsibility funding allegedly routed to an institution controlled by the former commission chairman in return for favouring selected candidates, and money allegedly collected from candidates and families for advance access to examination papers and secured selection. The alleged CSR payment was projected as legitimate institutional funding, while candidate-related collections were allegedly possessed, used, transferred, or projected as legitimate transactions.
September 23, 2026
Show AI Summary
Banking service continuity measures require public sector and regional rural banks to operate on Sunday during the proposed strike.
Banking-service contingency arrangements require Public Sector Banks and Regional Rural Banks to operate normally on Sunday, 27 September 2026, ahead of a proposed three-day bank strike. Reserve Bank approval permits bank branches, offices, ATM-linked branches and currency chests to remain fully operational. Customers are advised to use mobile banking, ATMs, internet banking, BC Points and UPI if the strike occurs, and to complete essential transactions in advance.
September 23, 2026
Show AI Summary
Inflation-driven monetary tightening may accompany strong growth as demand, price increases and adverse supply conditions shape rate expectations.
Inflationary pressures, robust demand, price rises and adverse supply developments are expected to lead to policy-rate tightening by RBI. Fitch anticipates a 25-basis-point rate rise in October, further tightening in early 2027, followed by easing in 2028. Growth projections were upgraded following stronger-than-expected June-quarter activity, but activity is expected to moderate as the effects of GST rationalisation and income-tax cuts recede, manufacturing and services slow, and below-normal monsoon conditions affect activity.
September 23, 2026
Show AI Summary
GDP growth forecast rises as domestic demand, investment, and public capital spending sustain economic resilience amid external risks.
India's GDP growth forecast for the current fiscal year is raised to 7 per cent, supported by investment demand, resilient consumption, manufacturing and services activity, lower-than-expected supply disruptions, and sustained capital inflows. Domestic demand, infrastructure expenditure, regulatory reforms, and improving private investment are expected to support growth. Inflation is projected to remain within the central bank's target range, subject to risks from geopolitical uncertainty, commodity prices, and weather-related disruption. Fiscal management is supported by public capital expenditure and robust direct-tax revenue.
September 23, 2026
Show AI Summary
Primary and secondary investment funds ammunition manufacturing expansion, increasing small-caliber capacity and establishing medium-caliber production.
Hughes Precision Manufacturing Pvt. Ltd. completed a Rs. 250+ crore investment round through primary and secondary investments. The capital will expand small-caliber ammunition capacity from approximately 80 million to 220 million rounds and establish a dedicated medium-caliber ammunition manufacturing facility. The expansion broadens its product portfolio and is supported by an order book exceeding Rs. 1,000 crore, including domestic defence and export orders scheduled for execution over approximately two years.
September 23, 2026
Show AI Summary
GDP growth outlook signals resilient expansion, but inflation, weaker rural demand, and supply pressures may prompt monetary tightening.
India's FY 2026-27 GDP growth forecast is raised to 6.9 per cent from 6.4 per cent, reflecting strong June-quarter growth and economic resilience. Economic momentum is projected to moderate as slower manufacturing and services expansion, below-normal monsoon rains, and rising inflation constrain demand. Strong demand, price increases and adverse supply conditions are expected to lead to monetary tightening.
September 23, 2026
Show AI Summary
FEMA scrutiny of insolvency acquisitions examines fund flows and possible indirect control by potentially ineligible resolution participants.
FEMA investigation concerns suspected foreign-exchange contraventions and the source and movement of funds used to acquire control of McNally Bharat Engineering Company Limited following its corporate insolvency resolution process. The inquiry also examines whether the process may have enabled persons potentially ineligible under Section 29A of the Insolvency and Bankruptcy Code, 2016, to regain indirect control of the company.
September 23, 2026
Show AI Summary
Export facilitation reforms integrate local support, digital trade intelligence, and streamlined Free Trade Agreement procedures to improve market access.
Export facilitation reforms contemplate integrated Commerce and Industry offices and trained local personnel to provide exporters with common access points and district-level handholding support. The Trade Connect platform is envisaged to provide product-wise and HSN-code-wise tariff, Free Trade Agreement and procedural information, supported by digital and AI-enabled tools. Reforms also address electronic verification of Certificates of Origin, integration across the export cycle, digitalisation, simplified trade documentation, reduced compliance burden, and adherence to international quality standards.
September 23, 2026
Show AI Summary
Monetary policy outlook: resilient growth and persistent inflation support a projected policy-rate increase amid weather and geopolitical risks.
India's FY27 growth outlook is revised upward to 7 per cent from 6.6 per cent, supported by industrial activity, consumption, goods exports and government investment. Consumer inflation is projected to average 5.1 per cent. Persistent inflationary pressures, solid growth, conflict in West Asia and weather-related risks are expected to support higher interest rates, while below-normal monsoon rainfall may affect agricultural output and food inflation.

News

Back

All News

Showing Results for :
Reset Filters
No Records Found

News

Back

All News

Micro, Small and Medium Enterprises: Challenges and Way Forward (Shri Shaktikanta Das, Governor, Reserve Bank of India - March 6, 2020 - at the 15th ASSOCHAM Annual Banking Summit)

March 6, 2020

Contents
Summary
Note

Note

-

Bookmark

Print

Print

At the outset, I wish to thank ASSOCHAM for inviting me to their 15th Annual Banking Summit. More so because this is ASSOCHAM’s centenary year. It is a remarkable accomplishment and I extend warm greetings to all those associated with ASSOCHAM. Over the years, ASSOCHAM has transformed itself into a forceful, proactive, forward-looking organisation to meet the aspirations of Indian business. I am certain that ASSOCHAM’s journey towards excellence will continue.

2. In a country like India with a population size of about 1.3 billion, the Micro, Small and Medium Enterprises (MSME) sector has a vital role in the economy. It fosters entrepreneurship and generates large employment opportunities. As MSMEs absorb the surplus agricultural labour, they help reduce the problem of disguised unemployment in rural areas. MSMEs are also complementary to large industries as ancillary units and also play an important role in the whole eco-system of the secondary and tertiary sector.

3. We all are aware that the MSME sector is passing through a challenging phase. The theme of today’s Summit - ‘Structural Reforms in MSME Funding’ - chosen by ASSOCHAM, therefore, could not be more apt and timely. In my address today, I would begin by underlining the importance of the MSMEs to the economy. I would then delve into some challenges faced by them and discuss some of the measures undertaken by the Reserve Bank. I shall also list out some issues as a way forward.

I. Importance to the Economy

4. Let me begin by highlighting a few stylised facts on the contribution of MSME sector in India. The MSME sector contributes in a significant way to the growth of the Indian economy with a vast network of about 6.3 crore units and a share of around 30 per cent in nominal GDP in 2016-171. The share of the sector in total manufacturing output was even higher at 45 per cent2. Taking cognisance of the wider set of benefits that the sector offers to the rest of the economy, the Government has envisioned to increase its contribution to GDP to over 50 per cent in next few years as the country aspires for a ₹ 5 trillion economy3.

5. As per the 73rd round of National Sample Survey (NSS) conducted during the period 2015-16, the estimated employment in MSME sector was around 11 crore. Within MSME sector, each of the three sub-sectors, namely, trade, manufacturing and other services accounted for about a third of total employment. Around 50 per cent of the total MSMEs operate in rural areas and provide 45 per cent of total employment. Interestingly, the micro enterprises account for 97 per cent of total employment in MSME sector4. This relates to the problem of what is called the missing middle5, which suggests that micro firms have failed to grow into smaller and medium firms and so on over time. This seems to have kept the micro sector bereft of enjoying economies of scale, investment into fixed assets, adoption of technology and innovation.

6. The share of MSME sector in India’s merchandise exports stood at around 48 per cent in 2018-196. This signifies that Indian MSMEs are becoming globally competitive and their products/services are being accepted overseas. In this background, special attention needs to be given to improve the competitiveness and technology up-gradation endeavours. Various schemes and programmes of the Government, therefore, should be continued and effectively implemented.

II. Challenges in the MSME sector

7. Despite the MSME sector contributing significantly to the economy, it continues to face several challenges. The major challenges include physical infrastructure bottlenecks; absence of formalisation; inertia to technology adoption; capacity building; backward and forward linkages; lack of access to credit and risk capital; and the perennial problem of delayed payments, among others. Let me now elaborate on some of these issues.

Infrastructure bottlenecks and Competition

8. Notwithstanding various efforts to upgrade the infrastructure, the MSME clusters, particularly the micro enterprises, are inadequately equipped with necessary support systems which not only impede their day-to-day business operations but also their future growth prospects. While infrastructure constraint is only one side of the story, I believe that MSMEs also need to do their bit to improve competitiveness. They need to shed their inhibition to adopt new technologies; accept e-payments; and foster in-house innovation which will help them manage their businesses digitally and compete globally. Given the current scenario of global trade, the age-old methods of operating business with low levels of technology adoption deprives them of potential economies of scale. Lack of expertise in product development, designing, packaging and marketing strategy due to their small size add up to the pressure of adapting to the changing environment around them. The strategy for MSMEs should be to gradually expand in size and reduce the dependence on the incentive structure provided by the Government. Their aim should be eventually to compete on a global scale.

Access to Credit and Formalisation

9. Credit plays a vital role in development of MSME sector as funds at a reasonable cost can increase their competitiveness. Credit disbursal to this sector has, however, remained sluggish in recent periods. At an aggregate level, the total credit outstanding from banks and NBFCs to the MSME sector was approximately ₹ 16.6 lakh crore as at end of September, 2019. Scheduled commercial banks account for 90 per cent of the share of total credit outstanding.

10. As many MSMEs mainly operate in the informal space, assessing their creditworthiness can be difficult due to information asymmetry, particularly with respect to the financial performance of their businesses. In the absence of collateral, under-writing the customer often entails higher operating cost. Furthermore, due to their small-scale operations, MSMEs are not able to raise risk capital. They are also unable to take advantage of most of the Government schemes which are mostly based on digital infrastructure and require beneficiaries to have some form of digital identify and presence. With the implementation of structural reforms like GST and JAM trinity, the informal units are, however, getting integrated with the mainstream in recent years.

Delayed Payments

11. A large number of MSMEs are ancillary units catering to the needs of large industries, both in the public and private sector. They often face the problem of delayed payments, affecting their cash flow and working capital availability. Most of the time, delay in realisation of such receivables increases their operating cycle and reduces their ability to procure new orders or fulfil the existing ones. A primary survey conducted by Reserve Bank in December 2019 showed that 44 per cent of MSMEs engaged in manufacturing activities faced delay in payments. The ones not receiving timely payment mainly belonged to basic metal and metal products, engineering, construction and infrastructure related industries. On the other hand, delay in payments was lower at 27 per cent for services sector. Here transport operators mostly faced such situations. Although Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 contains provisions related to penalty in case of delayed payments by the buyers, weak bargaining power and the fear of losing the business prevents MSMEs to invoke this provision.

III. Expert Committee on MSMEs

12. In order to understand the structural bottlenecks and factors affecting the performance of the MSMEs, RBI had set up an Expert Committee on MSMEs under the Chairmanship of Shri U.K Sinha in January 2019. The Committee has undertaken comprehensive review of the sector and given several recommendations for the economic and financial sustainability of the MSME sector. These recommendations are wide-ranging and broadly relate to legislative changes; infrastructure development; capacity building; technological upgradation; improving backward and forward linkages; improving financial support from formal sources; newer technological interventions for robust underwriting practices; and credit delivery, among others. While some of the recommendations of the Committee have already been implemented, others are under consideration by the authorities concerned.

IV. Measures Undertaken by RBI

Measures to Improve the Credit Flow

13. The Reserve Bank has taken several measures in the recent period to improve the flow of credit to the MSME sector. Banks form the predominant source of formal credit to MSMEs with all such loans by banks qualifying for Priority Sector Lending classification. In August 2019, we have further incentivised banks to lend to MSMEs through the NBFC sector. Consequently, bank credit to registered NBFCs (other than Micro Finance Institutions) for on-lending to micro and small enterprises up to ₹ 20 lakh per borrower are eligible for classification as priority sector lending.

14. A scheme of one-time restructuring without an asset classification downgrade was permitted to GST registered MSME accounts that were in default but standard as on January 1, 2019. As the process of formalisation of the MSME sector has a positive impact on financial stability and this process is still underway, the scheme has been extended to accounts that are standard but in default as on January 1, 2020 and restructuring, wherever eligible, has to be implemented latest by December 31, 2020. This will enhance the scope of the scheme by benefitting the eligible MSME entities which could not be restructured under the provisions of the circular dated January 1, 2019 as also the MSME entities which have become stressed thereafter. So far, banks have restructured 6 lakh accounts out of 15 lakh eligible accounts under the scheme. Our primary survey suggested lack of awareness about the scheme among the MSMEs.

15. We have announced last month that incremental loans to MSMEs along with retail loans for automobiles and residential housing will be exempted from CRR from fortnight ending January 31, 2020 up to fortnight ending July 31, 2020.

16. Subsequent to the introduction of an external benchmark system in October 2019, the monetary policy transmission has improved where new floating rate loans to the micro and small entrepreneurs were linked to the external benchmark. With a view to further strengthening monetary policy transmission, all new floating rate loans to medium enterprises extended by banks from April 01, 2020 will also be linked to the external benchmarks.

Addressing Delayed Payments

17. As I have mentioned earlier, delay in getting payments is one the perennial problems faced by MSMEs. To address this issue, the Reserve Bank introduced the Trade Receivables Discounting System (TReDS) in 2014. TReDS is an electronic platform where receivables of MSMEs drawn against buyers (large corporates, PSUs, Government departments) are financed through multiple financiers at competitive rates. This is done through an auction-based mechanism. To widen the scope of TReDS and to incentivise more players to be part of this platform, banks’ exposure through this platform were brought under priority sector lending in 2016. Presently, three entities [viz., Receivables Exchange of India Ltd. (RXIL), A. TReDS, and Mynd Solutions] licensed by the Reserve Bank are operating the platform for more than two years. Further, the Reserve Bank recently allowed ‘on tap’ authorization to entities desirous to provide platforms for TReDS. Hence, in coming years, competition in receivables discounting space is bound to increase with the entry of new players. This requires the corporates, both in the public and private sector, to join the TReDS platform and make the system more efficient.

18. In 2018, the Government made it mandatory for all companies with a turnover greater than ₹ 500 crores to register with TReDS. As on February 2020, while 8211 MSME sellers were registered while only 1530 buyers were participating on the platforms. I would appeal to the ASSOCHAM to encourage and handhold all its members to participate in the TReDS platform.

19. In the Union Budget 2020-21, the Government has announced app-based invoice financing products to obviate the problem of delayed payments of MSME. The mechanism may prove complementary to the TReDS platform and would further alleviate the problem of delayed payments.

V. Way forward

20. As the MSME sector holds immense potential, the need is to have a right set of policies and enabling framework which guide and support MSMEs to effectively handle their existing problems and venture into new areas. While both the Government and the RBI have introduced a plethora of measures for improving access to finance and to promote growth of the sector, the small size of individual units and informal nature of the sector continue to pose challenges.

21. The traditional bank lending system by banks is based on financial statements and collateral of the borrower. With increased availability of data from several sources, including GSTN, income tax, credit bureaus, etc., it is now possible to appraise the MSME loan proposals expeditiously by doing due diligence online. Further, with the help of Account Aggregators (AA), lenders will have access to potential borrower’s financial information at a single point, of course, with his/her consent. Furthermore, emergence of FinTech companies has made it possible to assess credit worthiness of MSMEs by utilising unexplored data sources such as digital transaction trails, data generated through e-commerce sites, etc. Some lenders are collaborating with FinTech companies to take advantage of such surrogate data for speedier credit underwriting for extending loans to MSME sector. These new architectures would expand the reach of credit.

22. While the new models are beneficial for those units which are digitally active, a large segment of MSME units access credit through traditional lending models. While micro enterprises act as a starting stage of entrepreneurship that requires low investment in technology, units graduating to small and medium enterprises have to enhance their technical capacity and explore newer markets in order to stay competitive for sustainable growth. Recent policy efforts will provide an enabling environment and facilitate the MSME sector seize the new emerging opportunities. I must add that as a regulator, we in RBI have to safeguard financial stability while ensuring wider access to finance. Banks and other players on their part have to ensure prudent lending.

23. Besides, we in RBI have started launching cohorts under the Regulatory Sandbox. First such cohort was launched in November 2019 with the theme of ‘Retail Payments’ to spur innovation in digital payments space to design and test newer payment services for the unserved and underserved segments. In due course, we propose to run a regulatory sandbox for cohorts focussed on lending. This would promote innovation in MSME lending segment. The project on Public Credit Registry (PCR) will fundamentally address the information asymmetry that impedes access to credit for micro and small entrepreneurs. The PCR has been envisaged as a database of core credit information. The registry would play crucial role in reducing credit gap in the segment.

24. Given the fact that the MSME sector contributes significantly to exports, it is essential that they should be integrated with global value chains (GVC) to remain competitive as it offers unique opportunity to become technologically and digitally empowered. Being part of GVC would enable MSMEs to produce quality goods and services which will have greater acceptability in the global market. The major challenges for the sector to connect to the GVC are lack of information, knowledge of markets and quality standards. In this regard, I see a greater role for cooperation among all stakeholders.

25. Let me conclude by reiterating that industry bodies like the ASSOCHAM will need to extend their role and assist MSMEs embrace best business practices in line with the fast-changing business environment.

I wish this summit of ASSOCHAM all success in its centenary year.

Thank You.

--------

1 Annual Report, Ministry of MSME 2018-19.

2 Report of the Expert Committee on Micro, Small and Medium Enterprises (Chairman: U.K. Sinha), June 25, 2019.

3 Ministry of Micro, Small and Medium Enterprises, Government of India, September 24, 2019.

4 Annual Report Ministry of MSME 2018-19

5 Krueger, A. O. (2013). The missing middle. Economic reform in India: Challenges, prospects, and lessons, 299.

6 Ministry of Micro, Small and Medium Enterprises, Government of India, July 2019

 

Topics

Acts Income Tax