The Parliamentary Standing Committee on Finance (SCOF) would have proposed to provide a credit card to MSME entrepreneurs similar to Kisan credit cards with the aim of providing small businesses with access to credit and integrating them into a formal financing system.
The aim is to help small businesses with working capital, trade finance, provide capital loans at affordable rates and the necessary credit guarantees, according to Economic times. The plan is to do this by registering in the Udyam portal and automatically obtaining the Vyapar credit card.
Currently, only 6.34 million MSMEs, which represent less than 40% of MSMEs in the country, have borrowed from the formal financial system.
Former Minister of State for Finance and Chairman of the Commission Jayant Sinha believes that such a platform will provide MSMEs with an affordable line of credit. Last week, Chief Economic Advisor V Anantha Nageswaran noted that bank lending is beginning to recover, especially in the MSME sector at an event organized by AIMA.
During the Union Budget 2022, which focused on three pillars of inclusive wellbeing – financial aid, digital transformation and upskilling – Finance Minister Nirmala Sitharaman reiterated his commitment to creating a strong ecosystem for MSMEs and startups.
The government has also ensured that MSMEs can avail themselves of the credit needed to cope with the pandemic-stricken economy by extending the Emergency Credit Line Guarantee Scheme (ECLGS) until March 31, 2023. .
It had provided credit support of an additional Rs 2 lakh crore to MSMEs in the form of a Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE).
According to Arun Poojari, co-founder and CEO of Cashinvoice, “supply chain finance is a readily available solution that offers a sustainable alternative, both for the immediate present where cash on hand is at a premium, and at the future, as Indian MSMEs, seek to grow.”
However, the ongoing war between Russia and Ukraine has had a significant impact on the Indian MSME sector with the unexpected supply chain disruption.