Lok Sabha Question No. 808 (UNSTARRED), answered on 2018-12-14
Subject: Liquidity Squeeze of MSMEs
Ministry: FINANCE
Asked by: SHRIKANT EKNATH SHINDE, PRITAM GOPINATH MUNDE, KUNWAR PUSHPENDRA SINGH CHANDEL, VINAYAK BHAURAO RAUT, DHARMENDRA YADAV, Shrirang Appa Barne

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA

## UN-STARRED QUESTION NO. 808 TO BE ANSWERED ON 14th DECEMBER, 2018 AGRAHAYANA 23, 1940 (SAKA)

## 'Liquidity Squeeze of MSMEs'

808 :

Dr. Shrikant Eknath Shinde

Dr: Pritam Gopinath Munde

Shri Kunwar Pushpendra Singh Chandel:

Shri Vinayak Bhaurao Raut

Shri Dharmendra Yadav

Shri Shrirang Appa Barne

## Will the Minister of FINANCE be pleased to state

- (a) whether Micro, Small and Medium Enterprises (MSMEs) sector is among the sectors worst affected by demonetisation and banks are unable to meet entire credit demands of the MSME sector;
- (b) if so, the details thereof and the reasons therefor along with the response of the Government thereto;
- (c) whether the MSMEs had increasingly relied upon the Non-Banking Financial Companies (NBFCs) for   financial transactions and   loans, if SO, the details thereof;
- (d) whether the NBFCs are adverse effect on MSMEs, if so, the details thereof and the reasons therefor; and
- (e) the remedial steps taken or proposed to be taken by the Union Government to meet the funds requirement of MSMEs ?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI SHIV PRATAP SHUKLA)

- (a) & (b) As per MSME-Pulse Report September , 2018, prepared by TransUnion CIBIL and Small Industries Development Bank of India (SIDBI) , Micro (credit exposure less than Rs.1 crore) and Small and Micro Enterprise (SME) (credit exposure in the range of Rs.1 crore to Rs.25 crore) exhibited Year on Year (y-0y) growth of 21% and 14% respectively between June, 2017 and June, 2018.
- (c) Credit to MSMEs from Deposit Taking and Non-Deposit Taking Systematically Important Non-Banking Financial Companies (NBFCs) has increased   from Rs.1,10,400 crore in June 2017 to Rs.1,55,981 crore in June 2018 as per data compiled by Reserve Bank of India (RBI):
- (d) Aisiet Liability Management Guidelines are in place for NBFCs to manage their liquidityirisk with particular emphasis on financing the gaps in streoseananarer [ecadditiontvarious measures have been taken t0 ease liquidityrandemeeefands requirements holders   including MSMEs. These, inter-alia, include; auctions, permitting banks to reckon certain additional Government securities held Bthem as High Quality Liquid Assets, higher single borrower exposure lireit for NBFCs up to December 31, enhancement (PCE) for bonds of minimum tenor of 3 years issued by NonPeriod (MHP) requirement for originating NBFCs in respect of loans of original maturity above 5 years, etc.
- (e) Government and RBI have taken several to meet funds requirement of MSMEs. These inter-alia, include, advice to all Scheduled Commercial Banks (SCBs) to achieve a 20% year-on-year growth in credit to Micro Enterprises  (MSEs) , allocation of 60% MSEs advances to the micro enterprise accounts, a 10% annual   growth in number of micro enterprise unforeseenlseasonal increase in demand, adoption of one cluster, operationalising at least one specialised MSME Branch in every district;, simplified computation %f working capital of MSE units to make it minimums20% setting up of   Trade Receivables   Discounting  System  (TReDS) to solve the problem of delayed payment of MSMEs, etc. steps