Lok Sabha Question No. 2826 (UNSTARRED), answered on 2024-12-12
Subject: Financial Inclusion for MSMEs
Ministry: MICRO, SMALL AND MEDIUM ENTERPRISES
Asked by: Dr. Kalanidhi Veeraswamy

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

## LOK SABHA UNSTARRED QUESTION NO. 2826 TO BE ANSWERED ON 12.12.2024

## FINANCIAL INCLUSION FOR MSMEs

2826. DR. KALANIDHI VEERASWAMY:

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

- (a) whether the Government has taken measures to improve financial inclusion for MSMEs in rural areas of Southern States;
- (b) if  so,  the  details  of  credit  support  provided  through  schemes  such  as  MUDRA  and  Prime Minister Employment Generation Programme (PMEGP) in these regions;
- (c) the number of MSMEs in rural areas of Tamil Nadu, Kerala, Andhra Pradesh, Karnataka, and Telangana that have benefited from these schemes;
- (d) whether the  Government is encouraging banks to simplify loan procedures for rural  MSMEs; and
- (e) if so, the details thereof?

## ANSWER

## MINISTER OF STATE FOR MICRO, SMALL AND MEDIUM ENTERPRISES (SUSHRI SHOBHA KARANDLAJE)

- (a): Measures taken by the Government to improve financial inclusion for MSMEs in the country include: -
- (i) Ministry of MSME,  through Khadi and Village Industries Commission (KVIC), is implementing  Prime  Minister's  Employment  Generation  Programme  (PMEGP)  for  assisting entrepreneurs  in  setting  up  of  new  enterprises  in  the  non-farm  sector  in  the  country.  The Scheme provide access to institutional finance to new  micro  enterprises  upto to Rs. 50 lakh under  Manufacturing  sector  and  Rs.  20  lakh  under  Service  sector  with  the  assistance  of Government subsidy from 15% to 35% of the project cost. Second loan assistance with project cost  upto  Rs.  1.00  crore  in  Manufacturing  sector  and  Rs.  25  lakh  in  Service  sector  is  also provided  to  existing  PMEGP/MUDRA  enterprises  for  upgradation  and  expansion.  Eligible subsidy for second loan is 15% of project cost (20% for NER & Hill States).
- (ii) Credit Guarantee Scheme for MSEs: Under CGSMSE, through Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), collateral free loans are provided to MSEs up to a limit  of  Rs.  500  lakh  (since  01.04.2023)  with  a  guarantee  coverage  up  to  85%  for  various categories of loans.

- (iii) Under  the  Special  Credit  Linked  Subsidy  Scheme  (SCLCSS)  component  of  NSSH  scheme, 25% subsidy (subsidy cap of Rs. 25 Lakh) is provided to SC-ST owned MSEs for purchase of new plant  &  machinery  and  equipment  of  through  term  loan  from  Prime  Lending  Institutes (PLIs) for manufacturing sectors and service sectors on which banks/financial institutions are offering business loans.
- (iv) Pradhan Mantri Mudra Yojana (PMMY) provides access to institutional finance to micro/small business  units  upto  to  Rs.  20  lakh  for  income  generating  activities  such  as  manufacturing, trading, services, activities allied to agriculture.
- (v) Priority  Sector  Lending:  All  bank  loans  to  MSMEs  qualify  for  classification  under  priority sector lending.
- (vi) Collateral  requirements:  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  and  small enterprises (MSE).
- (vii)  Timeline for credit decisions: For loans up to ₹25 lakh to units in the MSE borrowers, banks are advised that the timelines for credit decisions shall not be more than 14 working days.

(b) & (c): Details of credit support provided and number of enterprises benefitted under MUDRA and PMEGP in Southern States is given at Annexure -I.

(d) & (e): Reserve Bank of India has advised to banks on 'Credit delivery to the Micro and Small Enterprises Sector' to have a simplified application cum sanction form (which should also be printed in regional language) for loans upto Rs. 1 crore for micro units.

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Annexure-I Annexure-I: referred to in reply to part (b) and (c) of the Lok Sabha Unstarred Question No. 2826 for answer on 12.12.2024.

Details of credit support provided to the enterprises under PMEGP in rural in Southern States in last three financial years and current year (upto 09.12.2024) is given below:

Performance of PMEGP in South-zone during FY 2024-25 (up to 09.12.2024)

|   Sr. No. | State/UTs      | Loan sanctioned (Rs. Lakh)   | No of Units Assisted   | MM Subsidy (Rs. Lakh)   |
|-----------|----------------|------------------------------|------------------------|-------------------------|
|         1 | Andhra Pradesh | 25,040.24                    | 1,744                  | 8,922.03                |
|         2 | Karnataka      | 9,561.08                     | 1,027                  | 3,446.06                |
|         3 | Kerala         | 6,203.00                     | 904                    | 2,241.47                |
|         4 | Tamil Nadu     | 12,627.01                    | 1,316                  | 4,480.33                |
|         5 | Telangana      | 8,822.89                     | 675                    | 3,103.07                |

Performance of PMEGP in South-zone during FY 2023-24

|   Sr. No. | State          | Loan sanctioned (Rs. Lakh)   | No of Units Assisted   | MM Subsidy (Rs. Lakh)   |
|-----------|----------------|------------------------------|------------------------|-------------------------|
|         1 | Andhra Pradesh | 41,428.49                    | 4,721                  | 14,682.84               |
|         2 | Karnataka      | 32,720.58                    | 3,196                  | 11,714.28               |
|         3 | Kerala         | 18,805.40                    | 2,764                  | 6,709.11                |
|         4 | Tamil Nadu     | 47,790.55                    | 5,259                  | 16,943.45               |
|         5 | Telangana      | 26,012.13                    | 1,903                  | 9,073.13                |

Performance of PMEGP in South-zone during FY 2022-23:

|   Sr. No | State          | Loan sanctioned (Rs. Lakh)   | No of Units Assisted   | MM Subsidy (Rs. Lakh)   |
|----------|----------------|------------------------------|------------------------|-------------------------|
|        1 | Andhra Pradesh | 31,132.05                    | 2,497                  | 11,147.15               |
|        2 | Karnataka      | 34,440.51                    | 4,012                  | 12,499.74               |
|        3 | Kerala         | 18,035.76                    | 2,644                  | 6,508.04                |
|        4 | Tamil Nadu     | 43,963.59                    | 4,879                  | 15,813.22               |
|        5 | Telangana      | 24,924.92                    | 2,023                  | 8,891.18                |

Performance of PMEGP in South-zone during FY 2021-22

|   Sr. No | State          | Loan sanctioned (Rs. Lakh)   | No of Units Assisted   | MM Subsidy (Rs. Lakh)   |
|----------|----------------|------------------------------|------------------------|-------------------------|
|        1 | Andhra Pradesh | 24,626.13                    | 2,009                  | 8,840.95                |
|        2 | Karnataka      | 34,787.51                    | 4,357                  | 12,656.43               |
|        3 | Kerala         | 16,658.38                    | 2,287                  | 5,979.10                |
|        4 | Tamil Nadu     | 39,869.10                    | 4,916                  | 14,516.28               |
|        5 | Telangana      | 23,330.73                    | 2,272                  | 8,488.42                |

Details of credit support provided through MUDRA upto 01.11.2024 in Southern States since inception of the Scheme:

|   S. No. | State          |   No. of Loan Accounts (in cr.) |   Loan Disbursed (Rs. in lakh cr.) |
|----------|----------------|---------------------------------|------------------------------------|
|        1 | Andhra Pradesh |                            0.97 |                               1.1  |
|        2 | Karnataka      |                            4.81 |                               2.86 |
|        3 | Kerala         |                            1.63 |                               1.1  |
|        4 | Tamil Nadu     |                            5.67 |                               3.09 |
|        5 | Telangana      |                            0.73 |                               0.67 |