Lok Sabha Question No. 3487 (UNSTARRED), answered on 2023-08-10
Subject: GST-Registered MSMEs
Ministry: MICRO,SMALL AND MEDIUM ENTERPRISES
Asked by: Pradyut Bordoloi

## GOVERNMENT OF INDIA MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

## LOK SABHA UNSTARRED QUESTION NO. 3487 TO BE ANSWERED ON 10.08.2023

## GST -REGISTERED MSMEs

## 3487. SHRI PRADYUT BORDOLOI:

Will the Minister of MICRO, SMALL AND MEDIUM ENTERPRISES be pleased to state:

- (a) whether  the  Government  has  taken  alternative  measures  to  encourage  investments  and capacity building in light of the challenges being faced  by Micro, Small and Medium Enterprises (MSMEs) in accessing finance and discontinuation of two per cent interest subvention scheme for GST-registered MSMEs and if so, the details thereof and if not, the reasons therefor;
- (b) the details of retail MSMEs which are currently utilising digital tools for their day-to-day operations for the last five years, State-wise;
- (c) whether the Government is incentivizing MSME investments in digital transformation along with the measures being implemented to make the digital ecosystem including sensors and systems more affordable for MSMEs and if so, the details thereof; and
- (d) the  steps  taken  by  the  Government  to  promote  fintech  solutions  for  enhancing  MSMEs' access  to  finance,  particularly  the  efforts  made  to  integrate  fintech  platforms  with  traditional banking services?

## ANSWER

## MINISTER OF STATE FOR MICRO, SMALL AND MEDIUM ENTERPRISES (SHRI BHANU PRATAP SINGH VERMA)

- (a): The Government has taken many measures to improve the flow of credit to MSMEs in the country. Some of them are given below:
- i. Priority  Sector  Lending  Guidelines:  In  terms  of  Master  Direction  on  'Priority  Sector Lending (PSL) - Targets and Classification' dated September 4, 2020, all bank loans to MSMEs conforming to the conditions prescribed  therein qualify for  classification  under Priority Sector Lending.
- ii. Collateral  requirements  of  MSME  units:  Scheduled  Commercial  Banks  have  been mandated not to accept collateral security in the case of loans up to ₹10 lakh extended to units in Micro & Small Enterprises category. RBI issued circular No. RPCD.SME & NFS. BC. No. 79/06.02.31/2009-10 dated May 6, 2010.
- iii. CGTMSE provides credit guarantee to its Member Lending Institutions for loans extended by  them  to  Micro  and  Small  Enterprises  without  any  collateral  security  and  third  party guarantee.  With  effect  from  01.04.2023,  the  credit  limit  for  Guarantee  Coverage  under Credit Guarantee Scheme for Micro & Small Enterprises has been enhanced from ₹ 2 crore to ₹ 5 crore and the annual guarantee fees have been reduced by 50%.

- iv. Infusion  of  Rs.9,000  crore  in  the  corpus  of  Credit  Guarantee  Fund  Trust  for  MSEs  to enable  an  additional  credit  of  Rs.2.00lakh  crore  at  reduced  cost  (Budget  announcement 2023).
- v. Under  the  revised  guidelines  of  Prime  Minister's  Employment  Generation  programme issued on 13.05.2022, the project cost for Manufacturing and Services have been enhanced to Rs. 50.00 Lakh and Rs. 20.00 Lakh, respectively from Rs. 25.00 Lakh and Rs. 10.00 Lakh respectively.
- vi. Under Aatmanirbhar Bharat, the Government of India has  announced Self Reliant  India Fund to infuse equity in MSMEs which have the potential and viability to grow.
- vii. New revised  composite  criteria  of  Investment  &  turnover  for  classification  of  MSMEs adopted on 26.06.2020.

viii. 'Udyam Registration' for MSMEs, for Ease of Doing Business w.e.f. 1.7.2020.

- ix. Launch  of  Udyam  Assist  Platform  on  11.01.2023  to  bring  Informal  Micro  Enterprises under the formal ambit for availing the benefits under Priority Sector Lending.
- x. No global tenders for procurement up to Rs. 200 crore.

(b): The Ministry of MSME does not maintain such data.

(c) & (d): As informed by Reserve Bank of India (RBI) and Department of Financial Services (DFS),  Ministry  of  Finance  to  increase  investment  inflow  through  the  fintechs,  a  number  of measures have been taken; including the following:

-  Trade  Receivables  Discounting  System  (TReDS):  In  order  to  address  the  problem  of payments to MSMEs, RBI has issued guidelines for setting up and operating the TReDS. The scheme facilitates the financing of trade receivables of MSMEs from corporate and other  buyers,  including  government  departments  and  public  sector  undertakings  through multiple financiers electronically.
-  Account  Aggregator  (AA)  Framework:  As  a  regulator,  RBI  has  created  an  enabling environment for growth of digital technology for new financial products and services.
-  The  Government  e-Marketplace  has  launched  'GeM  SAHAY',  a  mobile  app  based financing solution for the Micro and Small Enterprises (MSEs) on a pilot basis to enable collateral  free  online  credit  to  eligible  MSEs  from  public  sector  /scheduled  banks  and NBFCs at competitive interest rates. The GeM SAHAY product is built on Open Credit Enablement  Network  (OCEN)  platform and  works  completely  without  any  manual interface.

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