Ease of Doing Business for MSMEs: West Bengal’s former finance minister Amit Mitra on Monday wrote a letter to the Union Finance Minister Nirmala Sitharaman highlighting that around 40,000 weavers and artisans in the state have been denied access to loans due to “stringent notifications” by the central government and the RBI, reported PTI. 

In the letter, Mitra, the current Principal Chief Adviser to West Bengal’s Chief Minister, suggested that self-certification should be allowed instead of the requirement to submit Permanent Account N​umber (PAN) for cash-strapped micro-entrepreneurs, whose income was far below taxable limits. This came at a time when West Bengal (Kolkata) is hosting the G20 summit on financial inclusion from January 9, 2023 onwards. 

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He wrote, “You would be shocked to know that there is a staggering 66 per cent rejection rate for weavers … and 62 per cent for artisans. These artisans had gone through District Investment Centre’s and held Artisan’s Credit cards.” 

Referring to a recent meeting of the State level bankers’ committee which he mentored, Mitra, who’s also an economist, said that it became evident that “the cause of such huge rejection by banks was stringent notifications by the government making mandatory a variety of requirements including PAN cards, etc.” 

These government notifications are dissuading bankers from clearing micro-loans which is leading to significant rejections of otherwise prudent lending, he added.

“This is even more pertinent at a time when G20 is being held under India’s presidency. You are aware the G20 nations, have made financial inclusion of SMEs and micro enterprises as their focus area in the global action plan,” stated Mitra in the letter. 

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Appealing to Sitharaman, he wrote, “Your urgent intervention is critical for ‘financial inclusion’ of the entrepreneurs from the bottom of the pyramid. I humbly urge you to persuade both RBI and MSME department of GOI to rectify the notifications and allow self certification is by Mike weavers and artisans for bank loan applications, as was the case in the initial notification.”