Credit and Finance for MSMEs: The monetary and regulatory measures taken by the Reserve Bank of India (RBI) to assistance the government’s ECLGS scheme and subordinate debt scheme will support ameliorate anxiety in the MSME sector and open new enterprise possibilities, the central bank’s Governor ShaktiKanta Das stated on Thursday. Addressing the 185th Foundation Day of Bombay Chamber of Commerce and Industry (BCC), Das added that the MSME sector has emerged as the development engine of the economy even as it has been rendered in particular vulnerable by the pandemic necessitating concerted efforts to combat anxiety and concentrate on revival of the sector.
“In this regard, ECLGS and credit guarantee scheme for subordinate debt were introduced by the government. These have been duly supported by various monetary and regulatory measures by the RBI in form of interest rate cuts, higher structural and durable liquidity, moratorium on debt servicing, asset classification standstill, loan restructuring package, and CRR exemption on credit disbursed to new MSME borrowers,” stated Das.
Under the ECLGS scheme, banks had sanctioned Rs 2.39 lakh crore out of Rs 3 lakh crore corpus as of January 29, 2021. This was up from the sanctioned loan quantity of Rs 2.14 lakh crore to 90,57,300 borrowers as of January 8, 2021, according to the information from the Finance Ministry. With respect to the subordinate debt scheme, the quantity of beneficiaries as of February 4, 2021, stood at only 272 involving an quantity of Rs 30.84 crore, according to the information shared by MSME Minister Nitin Gadkari in a written reply to a query in the Lok Sabha. Launched in June 2020 and operationalized in August, the scheme intended to advantage 2 lakh MSMEs that are NPAs or stressed.
“Going forward RBI stands ready to support SIDBI for greater credit penetration to the MSME sector,” stated Das.
Also study: Commercial credit enquiries by MSMEs hover about pre-Covid level just after peaking in June post ECLGS launch
Covid had also impacted India’s export drastically. The nation was the worst performer in merchandise exports in comparison to other Asian nations which includes China, South Korea Vietnam, Indonesia, Malaysia, and even Bangladesh. During the March-October period, the exports witnessed year-on-year development in only September even as China and Vietnam saw development in six of these eight months. On the other hand, Bangladesh witnessed development in 3 months, TheSpuzz had reported in December citing the official information of these nations. MSME share in India’s exports has been 48 per cent.
“Our focus is to prevent excessive volatility in the exchange rate. Even during Covid times, the rupee fluctuation has been within a particular range. It reached about Rs 76.90 per dollar briefly at the beginning of Covid. So, our focus is to prevent undue volatility in the exchange rate so that exporters and importers who are dependent on the exchange rate can make informed decisions. Once we prevent volatility, the (export) concern of every sector including MSMEs will be addressed,” added Das. At the starting of the pandemic, the rupee had closed at Rs 75.68 per dollar on March 31 and peaked to Rs 76.90.