Lok Sabha Question No. 1984 (UNSTARRED), answered on 2023-03-13
Subject: Credit to MSMEs
Ministry: FINANCE
Asked by: Sanjay(Kaka) Ramchandra Patil

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

## LOK SABHA

## UNSTARRED QUESTION NO.  1984

ANSWERED ON 13 th  MARCH, 2023 / 22 PHALGUNA, 1944 (SAKA)

## 'Credit to MSMEs'

1984. SHRI SANJAY KAKA PATIL:

Will the Minister of FINANCE be pleased to state:

- a) whether a number of Micro, Small and Medium Enterprises (MSMEs) are still reliant on informal financing today;
- b) if so, the details thereof along with the corrective steps taken by the Government to provide more financial assistance to these MSMEs;
- c) whether it is also true that most women entrepreneurs lack the required assets to obtain loans or financial assistance for their businesses;
- d) if  so,  whether  the  Government  plans  to  direct  financial  institutions  to  come  up  with  alternate ways of credit check to solve the issue of lack of collateral for credit to MSMEs; and
- e) if so, the details thereof?

## ANSWER MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (DR. BHAGWAT KARAD)

- (a)  and  (b):  A  progressive  and  vibrant  Micro,  Small  and  Medium  Enterprises  (MSME)  sector network and its substantive share to manufacturing output and exports are significantly contributing to  the  growth  of  the  economy.  In  this  background,  the  Government  of  India  has  consistently supported  the  sector  in  terms  of  meeting  their  credit  needs  at  affordable  rates  through  various initiatives as under:
- (1) A broad trend in the overall growth of credit of Scheduled Commercial Banks (SCBs) for the MSME Segment is as below:
- (2) As announced in the budget 2023-24, the Credit Guarantee Fund Trust for Micro and Small Enterprises  (CGTMSE)  is  being  revamped  by  way  of  infusion  of  Rs.  9,000  crore  in  its corpus. This will enable additional collateral-free guaranteed credit of Rs. 2 lakh crore, with a reduced cost of credit.
- (3) In  the  wake  of  Covid-19  pandemic,  Emergency  Credit  Line  Guarantee Scheme  (ECLGS) was  launched  in  May,  2020  as  part  of  Aatmanirbhar  Bharat  Abhiyaan  to  support  eligible Micro,  Small  and  Medium  Enterprises  (MSMEs)  and  business  enterprises  to  ease  their

| FY         | MSMEAdvances Outstanding (in crore)   |
|------------|---------------------------------------|
| FY 2019-20 | 16,97,836                             |
| FY 2020-21 | 18,45,188                             |
| FY 2021-22 | 20,44,788                             |

Source: Reserve Bank of India

liquidity  position.  The  Scheme  provides  for  collateral  free  loans  to  existing  eligible borrowers  with  100%  guarantee  in  respect  of  the  eligible  amount  as  per  the  Scheme guidelines. The scheme is valid till 31.3.2023.

## Number and Amount of Guarantees issued under ECLGS

(Number in crore and amount in Rs. Lakh crore)

| Particulars                     |   Total | Share of MSME   |
|---------------------------------|---------|-----------------|
| Number of loans guaranteed      |    1.19 | 1.13 (95.17%)   |
| Amount guaranteed (in Rs crore) |    3.63 | 2.40 (66.14%)   |

## *figure in brackets indicate MSME as percentage of Total

- (4) Target of 7.5 percent of Adjusted Net Bank Credit (ANBC), or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher, fixed for Scheduled Commercial Banks (SCBs) for lending to Micro Enterprises, under priority sector lending norms.
- (5) Special  restructuring  window  was  put  in  place  for  MSMEs,  to  support  them  in  view  of reduced cashflows during the pandemic, through:
3. (i) Resolution Framework 1.0, announced in August, 2020 which permitted implementation of restructuring till March, 2021; and
4. (ii) Resolution Framework 2.0, announced in May, 2021 which permitted invocation of restructuring till 30 th  September, 2021 to be completed within a period of 90 days.
5. (c) to (e): Credit guarantee schemes have been launched to address the issue of lack of collateral for Micro,  Small  and  Medium  Enterprises  and  offer  alternate  ways  to  enhance  flow  of  collateral  free credit to the MSME sector, namely:
6. (i) Credit  Guarantee  Fund  Trust  for  Micro  and  Small  Enterprises  (CGTMSE):  CGTMSE facilitates  access  to  collateral  free  credit  upto  Rs.  2  crore  for  micro  and  small  enterprises including women owned enterprises. As on 28.02.2023, out of total 69.04 lakh guarantees amounting  to  Rs.  4.06  lakh  crore,  issued  under  the  scheme,  14.34  lakh  guarantees amounting to Rs. 58,237.25 crore have been issued to women beneficiaries, which constitute 20.77% in number and 14.34% in amount.
7. (ii) Pradhan  Mantri  Mudra  Yojana  (PMMY):  The  Scheme  was  launched  on  08.04.2015  to extend collateral free loans upto Rs. 10 lakh to individuals including women to enable them to set up or expand their business activities. As on 24.02.2023, out of total of 39.65 crore loans  amounting  to  Rs.22.41  lakh  crore  extended  under  the  scheme,  27.20  crore  loans amounting to Rs. 10.04 lakh crore have been extended to women, which constitute 68% in number and 45% in amount.
8. (iii) Stand  Up  India  Scheme:  Stand-Up  India  Scheme  is  to  facilitate  loans  from  Scheduled Commercial  Banks  (SCBs)  of  value  between  Rs.  10  lakh  and  Rs.1  Crore  to  at  least  one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and one-woman borrower per bank branch for setting up greenfield enterprise in manufacturing, services or trading sector and also for the activities allied to agriculture. As on 28.02.2023, out of total of 1,75,008 loans amounting to Rs.39,517 crore extended under the scheme, 1,40,140 loans amounting to Rs. 32,161 crores have been extended to women, which constitute 80% in number and 81% in amount.

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