NSIC’s credit assistance to MSMEs for raw material procurement jumps 10% to over Rs 65 crore in FY21

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July 27, 2021 2:16 PM

Credit and Finance for MSMEs: Karnataka led the state-wise assistance under the RMA scheme in FY21 with Rs 26.81 crore provided to SC/ST entrepreneurs followed by Rs 10.90 crore for entrepreneurs in Odisha, Rs 9.09 crore in Maharashtra, Rs 8.42 crore in Assam, Rs 4.40 crore in Telangana, and more.

how to do msme udyam registration and know about its benefits and for whom this schemeA study by RBI has found that the majority of the banks do not go beyond 25 per cent (in priority sector lending) for MSME credit. (Image for representation)

Credit and Finance for MSMEs: Raw material financing scheme of the government’s MSME promotion body National Small Industries Corporation (NSIC) has provided assistance worth Rs 65.53 crore to SC/ST entrepreneurs during the financial year 2020-21. This was up 10 per cent from Rs 59.50 crore in FY20, and 12.5 per cent from Rs 58.23 crore in FY19 despite Covid-related challenges. “NSIC provides financial assistance to MSMEs under their Raw Material Assistance (RMA) scheme against bank guarantee for payment to the suppliers,” MSME Minister Narayan Rane said sharing the data in the Rajya Sabha on Monday. According to NSIC, the scheme provides credit support up to 180 days for MSMEs to avail economics of purchases like bulk purchases, cash discounts, etc.

“We have 15 dedicated offices for SC/ST entrepreneurs providing support from handholding to marketing etc., through a dedicated team. We have engaged with retired bankers as well to help expedite the bank credit process for entrepreneurs. The scheme provides raw materials at affordable and competitive prices for MSMEs so that the end product is also competitive in the market. We aggregate requirements of MSMEs and then negotiate for bulk discounts with manufacturers which are passed on to MSMEs,” Ravi Kumar, Chief General Manager, NSIC told Financial Express Online.

Data on the number of MSMEs supported under the RMA scheme couldn’t be ascertained with NSIC.

Manufacturing MSMEs having Udyam Registration certificate or previous Udyog Aadhaar Memorandum (UAM) can apply for the RMA scheme, according to NSIC. A limit is sanctioned for procurement of material on credit based on the raw material requirements of the unit, its financial position, and available security of equivalent value in the form of a bank guarantee. The limit for a single unit engaged in manufacturing is up to Rs 10 crore and Rs 6 crore to unit engaged in service activities. However, for a group of units, the limit is Rs 20 crore in manufacturing and Rs 15 crore in service activities. The validity of the limit sanctioned under the scheme is one year which can be renewed for another year.

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“Even during the Covid period, our field offices were functioning. We were also facilitating raw material procurement even for products such as oxygen cylinders, stainless steel tanks in the healthcare and pharma sectors to assist MSMEs. We are now expecting 15 per cent growth in the assistance offered that may go up to 20 per cent if there is no third Covid wave,” Kumar added.

Based on the data shared by the minister, Karnataka led the state-wise assistance under the RMA scheme in FY21 with Rs 26.81 crore in the assistance provided to SC/ST entrepreneurs followed by Rs 10.90 crore in Odisha, Rs 9.09 crore in Maharashtra, Rs 8.42 crore in Assam, Rs 4.40 crore in Telangana, etc.

According to a RedSeer analysis, the Indian retail busines-to-business (B2B) market is likely to grow at a 10 per cent CAGR from $714 billion in FY19 to reach $1.3 trillion by FY25 while the online B2B segment could be more than $60 billion by 2025. The margin in the online segment is may increase from 0-4 per cent with an almost two-fold potential jump on the back of direct procurement from brands, providing value-added services such as technology solutions, credit, and more.

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