As the issue of delayed payments from corporate and government agencies remains among the key challenges for Indian MSMEs, Finance Minister Nirmala Sitharaman in a meeting today with representatives from India Inc. and MSME sector has asked the ministry officials to separate disputed cases of delayed payments with the non-disputed ones in order to expedite the payments due to MSMEs, according to an MSME representative present in the meeting told Financial Express Online. Other key business leaders part of the meeting were Piramal Enterprises’ Ajay Piramal, Sajjan Jindal of JSW Group, Tata Steel’s T.V. Narendran etc. to discuss measures to boost the economy.
“The minister said that she has instructed the officials to divide the pending payments into two parts – one where there are disputes or legal issues and second where there are no issues and necessary records are there so that payment can be made in a time-bound manner,” Anil Bhardwaj, Secretary-General, Federation of Indian Micro and Small & Medium Enterprises (FISME) told Financial Express Online as MSME Minister Nitin Gadkari sought intervention of the finance minister especially on delayed payment held up with the government agencies and departments.
Nitin Gadkari also stressed on the disbursement of loans under PSB Loans in 59 Minutes scheme highlighting the low disbursement rate. “While MSME Minister, present in the meeting, said that while there were a lot of in-principle approvals (under the scheme) but there are hardly any disbursals, the finance minister informed in the meeting that she had already instructed the officials to look into the issue why conversions are not taking place,” Bhardwaj said.
The issue was raised days after Anurag Thakur, minister of state for finance informed the Rajya Sabha that as per the official data, nearly 80 per cent (1.59 lakh) of more than 2 lakh applications filed on the psbloansin59minutes.com were approved in-principle while over two-thirds (1.33 lakh) of total loan applications were sanctioned.
Another area of discussion in the meeting was lack of collateral-free loans as banks continue to ask for collaterals in giving loans to SMEs. “We tried to emphasise on the creation of demand as 25 per cent of the mandatory public procurement is not met by central ministry, department and PSUs annually. This needs to be strictly followed and ensured. We also suggested creating an offset for MSMEs of around 10-20 per cent though debatable from the investment made in infrastructure projects that could create demand for the MSME sector. The minister informed that she will get it examined,” Bhardwaj said.