Credit and Finance for MSMEs: MSME Minister Narayan Rane has reiterated that the government doesn’t have any plans to implement a rating system for monitoring micro, small, and medium enterprises (MSMEs). This assumed significance as the former MSME Minister Nitin Gadkari on multiple public events had announced that the government is in process of setting up a rating process to enable small businesses to access bank loans on the basis of the ratings. Replying to a question in Rajya Sabha in the ongoing winter session on whether the government has any plans to implement a rating system for monitoring MSMEs, Narayan Rane had said there are no such plans. Earlier this year as well in Lok Sabha, Rane had said that there is “no” plan by the government to implement a rating system for MSMEs.
However, in November 2019, Nitin Gadkari had announced that the government is in the process of launching ‘Digital data-based credit ratings’ for MSMEs to enable them to get bank loans on the basis of the ratings. For MSMEs with AAA rating, the government was expected to buy 15 per cent of the amount raised by them from public markets as equity stakes. The move was intended to encourage MSMEs to raise money from public markets.
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The current Road Transport and Highways Minister Gadkari had last year in May as well reiterated the need for the credit rating system. The minister had sought ideas for “an IT-based analysis system for rating of MSMEs to bring transparency and have result-oriented and time-bound processes,” at a webinar with the representatives of Chamber of Indian Micro, Small and Medium Enterprises (CIMSME) and the Institute of Cost Accountants of India on Covid impact on MSMEs.
Earlier this year also, the minister had called for the rating system and a dashboard for effective monitoring of MSME schemes. Addressing a webinar by CIMSME, Gadkari had said the whole world now wants to invest in Indian industry and with an effective rating system, MSMEs can get good investment from abroad.
Importantly, the erstwhile Performance & Credit Rating Scheme of the MSME Ministry was discontinued in December 2018, Gadkari had said in reply to a question in Lok Sabha in March 2020. The scheme was intended to provide a third-party opinion on MSMEs’ capabilities and creditworthiness in order to create awareness among them about the strengths and weaknesses of their existing operations.