CAIT demands restoration of MSME status for 8 cr traders

By: |
March 14, 2021 11:48 AM

CAIT has demanded restoration of MSME status taken away in 2017 from 8 crore retail and wholesale traders who are part of the service industry.

CAIT, MSME sector, Confederation of All India Traders, government removed retail and wholesale traders from the MSME category, Micro Units Development & Refinance Agency Ltd, MUDRA,While weekend lockdown continues in Maharashtra, Delhi will be under complete lockdown till April 26.

The Confederation of All India Traders (CAIT) has demanded restoration of MSME status taken away in 2017 from 8 crore retail and wholesale traders who are part of the service industry. The government in June 2017 removed retail and wholesale traders from the MSME category forcing the players either borrow at a higher rate or from informal financial sources, CAIT Secretary General Praveen Khandelwal told PTI.

According to banking sources, about Rs 3 lakh crore loans given to them are at the risk of losing a tag of MSME loan at the end of March when banks do their annual closure. As a result, many banks will face the problem of meeting priority sector lending (PSL) target and the shortfall may have to be parked with Small Industries Development Bank of India (SIDBI) or Micro Units Development & Refinance Agency Ltd (MUDRA).

Along with agriculture, loans given to MSME sector also come under the PSL and as per the RBI’s guidelines, commercial banks should extend 40 per cent of the total lending towards the priority sector. However, for regional rural banks (RRBs) and small finance banks (SFBs), the PSL target is 75 per cent.

PSL is available at concessional rate and objective behind is to promote these labour intensive businesses in the economy.
According to estimates, the country’s largest lender State Bank of India (SBI) alone will have to reclassify Rs 50,000 crore loans given to traders and ICICI Bank will do reclassification of about Rs 25,000 crore at the end of this month.

Khandelwal said even the Udyam portal launched in July last year after the revision in definition of Micro, Small & Medium Enterprises (MSMEs), denied MSME tag to traders. As a result, he said, traders are facing difficulty in getting loans from formal sources and even denied registration on Goverenment e-Market (GeM) platform as there is no MSME tag attached to the business.

“We have several representation to various authorities, including MSME Minister Nitin Gadkari for inclusion of traders under MSME category. CAIT has written a letter to Prime Minister Narendra Modi last year,” he said. However, he said the government is yet to make requisite changes and slowing down the process of greater formalisation of the economy.

In absence of supportive policies, a large chunk of business is out of formal system, he said, adding, it is right time for the government to take decision in this regard. It will not help in greater formalisation of economy but would lead to higher mobilisation of revenue, he added

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Run-up to 5G: Trai pushes for digital inclusion; proposal in works for rural areas
2Q1 Performance: ICICI Bank net profit surges 78% to Rs 4,616 crore
3ITC Q1 net profit jumps 28.6% to Rs 3,013 crore