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
    Xi to visit US from Sept 23 to 25 for talks with Trump; China calls it โ€˜milestone of historic significanceโ€™
    Supporting PM Modi's call, IIFL Finance's Mayank Sharma believes recycling household gold is the fastest way to cut import bill
    How will tribunals function if no infrastructure? SC directs Centre to identify amenities required
    India-New Zealand trade pact to come into force on Oct 20: Goyal
    China, US hold 'candid, in-depth' talks on tariffs, AI issues ahead of Xi-Trump meeting
    Rupee rises 24 paise to 95.72 against US dollar in early trade
    Advisory on use of version 3.3 of emSigner
    Conference on โ€œFinancing Indiaโ€™s Journey towards Viksit Bharatโ€ concludes in New Delhi
    IICAโ€™s Meet the Legend Programme Explores โ€˜PMLAโ€“IBC Interfaceโ€™
    IICA hosts important session on โ€˜IBC as an Evolving Law Through the Amendmentsโ€™,.
    Trump used to slam China. Here's why he's now rolling out the red carpet for Xi
    RBI orders removal of Maharashtra minister Babasaheb Patil, 7 others as directors of Latur DCC Bank
    LPG subsidy: Aadhaar biometric authentication mandatory for subsidised refills from Oct 1
    RBI orders removal of Maharashtra minister Babasaheb Patil, 7 others as directors of Latur DCC Bank
    US tariffs on Indian goods: A Chronology
    Graft case: Kerl BJP chief alleges 'fixed match' between Congress, CPM
    India's FTAs opening new career opportunities for youth: PM Modi
    AutomationEdge Launched Assist-Edge at Global Fintech Fest 2026, Redefining How Enterprises Build and Scale Automation
    BC.GAME's BC Engine Rewards Surpass $8.6 Million as Ecosystem Growth Accelerates
    NLMCโ€™s 21st Board Meeting Reviews progress of monetisation programme; stresses on Accelerated Asset Monetisation;
❮
❯
❯❯
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 21, 2026
Show AI Summary
Reciprocal tariffs and AI incident notifications frame bilateral talks on trade, security, technology and arms sales.
US sanctions legislation authorises the President to impose tariffs, including up to 100 per cent, on countries purchasing Russian oil and gas. China rejects tariffs directed at its Russian energy purchases and opposes unilateral sanctions and long-arm jurisdiction absent an international-law basis or a UN Security Council mandate. Washington and Beijing are also negotiating a reciprocal tariff-reduction framework covering products from both sides.
September 21, 2026
Show AI Summary
Gold recycling and financialisation can reduce import dependence by mobilising household holdings through exchange, credit and non-physical investment.
Organised gold recycling, responsible sourcing, gold loans and financialised gold products are identified as ways to reduce reliance on fresh gold imports. Exchanging old jewellery can meet retail demand from existing domestic holdings, while gold loans unlock credit without requiring households to sell their gold. Gold ETFs and digital gold permit exposure to gold's value without physical possession and may reduce physical import demand. Transparency, trust and supporting infrastructure are necessary to integrate household gold into an organised formal economy.
September 21, 2026
Show AI Summary
Tribunal infrastructure and member vacancies: amenities assessment and bench-level data collection address reduced sittings across company-law benches.
The Supreme Court required the Central Government urgently to identify, in consultation with the Tribunal President, infrastructural amenities needed by tribunal benches. The Principal Bench Bar Association was required to compile tabulated infrastructure data for every regional bench. At least 18 benches were asserted to conduct half-day sittings because of member shortages, against a sanctioned complement that remained unchanged despite expanded insolvency jurisdiction.
September 21, 2026
Show AI Summary
Duty-free access for Indian exports under the India-New Zealand trade agreement begins with its entry into force.
The India-New Zealand Free Trade Agreement will grant duty-free access in New Zealand to all Indian exports, displacing existing peak tariffs on products such as ceramics, carpets, automobiles, and auto components. Scheduled to enter into force on 20 October 2026, the agreement also includes New Zealand's long-term investment commitment in India.
September 21, 2026
Show AI Summary
Tariff sanctions and AI trade consultations examine reciprocal tariff reduction amid energy-purchase measures and objections to unilateral sanctions.
Expanded sanctions and tariff measures form the immediate trade-policy backdrop. The Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 authorises expanded sanctions and tariffs targeting Russia and countries that buy its energy exports. China contests the application of tariffs to its purchases and opposes long-arm jurisdiction and unilateral sanctions asserted without a basis in international law or a UN Security Council mandate. Parallel negotiations contemplate a reciprocal tariff-reduction arrangement.
September 21, 2026
Show AI Summary
Rupee appreciation in early trade reflects lower crude prices and stronger domestic equities despite dollar demand.
Rupee appreciation in early interbank trading saw the currency strengthen by 24 paise to 95.72 per US dollar. Lower Brent crude prices, gains in domestic equities and improved foreign fund sentiment supported the currency, while importer demand for dollars and broader US-dollar strength limited gains. Market commentary identified a broad near-term trading range, and foreign-exchange reserves declined because foreign-currency and gold reserves fell.
September 21, 2026
Show AI Summary
Digital signature compatibility requires updated signing software for newly issued tokens, while functioning existing certificates remain usable until expiry.
Digital-signature users with tokens issued on or after 21 September 2026 must install emSigner v3.3, while users whose existing certificates and tokens function normally may retain their current version. Version 3.3 supports existing tokens and is required where signing fails or certificates cannot be selected despite correctly installed drivers. Certificates downloaded to FIPS 140-2 dongles on or before that date remain valid until expiry; later renewal or fresh issuance generally requires FIPS 140-3 dongles, subject to specified exceptions.
September 21, 2026
Show AI Summary
Private capital mobilisation for development financing requires predictable investment conditions, credible projects, fiscal transparency, and strengthened State capital expenditure.
Development financing for Viksit Bharat is framed as a joint Union-State and private-sector task requiring higher savings and investment, fiscally resilient public finances, and mechanisms to mobilise private capital. Fiscal sustainability requires State-wise debt assessments and fuller disclosure of off-budget borrowings, guarantees, arrears and borrowings through State-owned entities. Public resources are expected to play a catalytic role in attracting private investment, supported by predictable rules, enforceable contracts, faster dispute resolution and stronger investment protections.
September 21, 2026
Show AI Summary
PMLA-IBC interface examines challenges in harmonising insolvency resolution with money-laundering asset attachment, investigation, tracing and enforcement.
The PMLA-IBC interface addresses reconciliation of insolvency resolution with anti-money-laundering enforcement where corporate debtor assets are attached during resolution. Section 32A is central to this interaction, although harmonised implementation remains challenging. The framework also considers money-laundering stages, hawala transactions, financial investigation, asset tracing, and evolving judicial approaches to aligning insolvency objectives with enforcement measures.
September 21, 2026
Show AI Summary
Evolving insolvency law relies on legislative amendments and regulatory mechanisms to respond effectively to changing market conditions.
Subordinate legislation and regulatory mechanisms are important tools for maintaining responsiveness within the insolvency framework. Regulations may be framed for provisions of the Code and for fulfilment of its purposes and objectives, enabling practical responses to emerging issues. The interaction between primary legislation, regulations and market developments supports continuing refinement of insolvency law in line with changing conditions.
September 20, 2026
Show AI Summary
Tariff policy and trade truce reshape bilateral engagement as rare-earth leverage limits coercive economic measures.
United States-China trade relations are being conducted through continued tariff policy, prior export restrictions, and a trade truce after escalating tariffs did not achieve their intended effect of changing Chinese economic conduct. China's concentrated supply of rare-earth inputs used in electronics provided negotiating leverage and contributed to the trade armistice. Indications that Chinese goods are routed through third countries to lessen tariff exposure qualify the decline in the bilateral goods imbalance. Continued tariffs have not constrained China's manufacturing expansion or its access to export markets.
September 20, 2026
Show AI Summary
Ten-year director tenure cap governs removal of ineligible cooperative bank board members after regulatory review.
RBI required Latur District Central Cooperative Bank to remove directors considered ineligible for exceeding the ten-year maximum tenure applicable to district central cooperative bank directors. The action invoked director ineligibility under the Banking Regulation Act. Following a complaint and a court-directed timeline for regulatory action, RBI sought responses from the concerned directors, seven of whom resigned. An issue was raised over whether the tenure cap could apply retrospectively to appointments made before its stated commencement and whether it was being applied uniformly.
September 19, 2026
Show AI Summary
Biometric Aadhaar authentication becomes essential for domestic LPG consumers seeking regulated subsidised refill bookings, while market-price supply remains available.
Biometric Aadhaar authentication is required from October 1 for domestic LPG consumers to book subsidised refills at the regulated retail selling price. Authentication can be completed through delivery personnel, distributor showrooms or designated mobile applications. Consumers unwilling or unable to authenticate may obtain LPG at the applicable market price without subsidy after registering their choice through specified digital channels. The framework distinguishes subsidised LPG linked to Aadhaar-authenticated consumers from market-priced LPG and seeks targeted subsidy delivery, reduced leakage, and prevention of diversion, duplicate connections and ineligible access.
September 19, 2026
Show AI Summary
Cooperative bank director tenure limits require disqualification and removal when service exceeds the statutory maximum period.
Directors of District Central Cooperative Banks and Central Cooperative Banks are subject to a maximum 10-year tenure under the Banking Regulation Act, 1949, as amended by the Banking Laws (Amendment) Act, 2025. RBI directed removal of a director ineligible to continue under section 10A(2A)(i), read with section 56, following concerns that directors of Latur District Central Cooperative Bank had exceeded the permitted tenure.
September 19, 2026
Show AI Summary
Tariff treatment of Indian exports shifted from reciprocal duties to targeted trade measures, sectoral duties, and specified exemptions.
Upon expiry of the temporary global measure, an India-targeted 10 per cent Section 301 tariff, linked to forced-labour concerns, replaced it; the effective charge for most covered exports remained MFN duty plus 10 per cent. The current regime applies the Section 301 tariff to Indian exports except specified goods, with separate sectoral duties on steel, aluminium and auto components. Smartphones, medicines and energy products are exempt.
September 19, 2026
Show AI Summary
PMLA-based FIR request over alleged consultancy payments remains under legal examination amid criticism of non-registration.
Enforcement Directorate sought registration of an FIR concerning alleged fraudulent payments by Cochin Minerals and Rutile Ltd to Exalogic Solutions, represented as IT consultancy fees. The request relied on evidence gathered through investigation and searches under the Prevention of Money Laundering Act. Registration remained under consideration after receipt of the Advocate General's legal opinion, with the Home Department examining the matter.
September 19, 2026
Show AI Summary
Free trade agreements expand market access, entrepreneurial partnerships and youth career opportunities alongside public-sector recruitment and development participation.
Free Trade Agreements are presented as mechanisms for expanding cross-border partnerships, market access for entrepreneurs, and career opportunities for young persons. Youth employment is also linked to the expansion of the startup ecosystem beyond major cities and to public-sector recruitment through Rozgar Melas. Newly selected candidates are to join central government ministries, departments and organisations. Public service is framed around citizen-centred administration and decisions supporting a developed and self-reliant India.
September 19, 2026
Show AI Summary
AI governance for regulated financial services enables natural-language automation while preserving enterprise security, auditability, control, and scalable deployment.
Assist-Edge enables teams to describe intended processes in natural language and use AI to create, modify, and enhance executable workflows. Working with reusable AI agents and workflows, it supports discovery, customisation, deployment, and scaling of enterprise automation. For banking, financial services, and insurance operations, its use is positioned alongside security, governance, auditability, and control, supporting governed adoption of scalable AI capabilities and movement from isolated experimentation to enterprise-wide intelligent automation.
September 19, 2026
Show AI Summary
Recurring token reward distributions connect eligible holdings, platform activity, and partner participation through hourly settlement cycles.
BC Engine permits eligible $BC holdings to participate in hourly settlement rounds distributing BCD rewards. Participants can monitor active balances, cumulative rewards, unclaimed BCD, and settlement history through the Engine interface. Settlement amounts vary with ecosystem activity, while the mechanism links platform activity, token utility, user participation, and commercial partners through repeated value distribution rather than one-time promotional incentives.
September 19, 2026
Show AI Summary
Asset monetisation of surplus public land and buildings is accelerated through transparent, value-oriented processes and stakeholder coordination.
NLMC's Board recommended monetisation proposals involving surplus land and building assets valued at over Rs. 5,000 crore. Monetisation is facilitated through asset identification, due diligence, valuation and appropriate process structuring, with emphasis on transparency, efficiency and value realisation. Sustained coordination with asset-owning entities is intended to expedite implementation and support timely, commercially appropriate monetisation of underutilised public assets.

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