Credit and Finance for MSMEs: These (schemes) have been duly supported by measures in form of interest rate cuts, higher structural and durable liquidity, moratorium on debt servicing, asset classification standstill, loan restructuring package, and CRR exemption on credit disbursed to new MSME borrowers, said RBI Governor.
Credit and Finance for MSMEs: The monetary and regulatory measures taken by the Reserve Bank of India (RBI) to support the government’s ECLGS scheme and subordinate debt scheme will help ameliorate stress in the MSME sector and open new business opportunities, the central bank’s Governor ShaktiKanta Das said on Thursday. Addressing the 185th Foundation Day of Bombay Chamber of Commerce and Industry (BCC), Das added that the MSME sector has emerged as the growth engine of the economy even as it has been rendered especially vulnerable by the pandemic necessitating concerted efforts to combat stress and focus on revival of the sector.
“In this regard, ECLGS and credit guarantee scheme for subordinate debt were introduced by the government. These have been duly supported by various monetary and regulatory measures by the RBI in form of interest rate cuts, higher structural and durable liquidity, moratorium on debt servicing, asset classification standstill, loan restructuring package, and CRR exemption on credit disbursed to new MSME borrowers,” said Das.
Under the ECLGS scheme, banks had sanctioned Rs 2.39 lakh crore out of Rs 3 lakh crore corpus as of January 29, 2021. This was up from the sanctioned loan amount of Rs 2.14 lakh crore to 90,57,300 borrowers as of January 8, 2021, according to the data from the Finance Ministry. With respect to the subordinate debt scheme, the number of beneficiaries as of February 4, 2021, stood at only 272 involving an amount of Rs 30.84 crore, according to the data shared by MSME Minister Nitin Gadkari in a written reply to a question in the Lok Sabha. Launched in June 2020 and operationalized in August, the scheme intended to benefit 2 lakh MSMEs that are NPAs or stressed.
“Going forward RBI stands ready to support SIDBI for greater credit penetration to the MSME sector,” said Das.
Covid had also impacted India’s export significantly. The country was the worst performer in merchandise exports in comparison to other Asian countries including China, South Korea Vietnam, Indonesia, Malaysia, and even Bangladesh. During the March-October period, the exports witnessed year-on-year growth in only September even as China and Vietnam saw growth in six of these eight months. On the other hand, Bangladesh witnessed growth in three months, Financial Express had reported in December citing the official data of these countries. MSME share in India’s exports has been 48 per cent.
“Our focus is to prevent excessive volatility in the exchange rate. Even during Covid times, the rupee fluctuation has been within a particular range. It reached about Rs 76.90 per dollar briefly at the beginning of Covid. So, our focus is to prevent undue volatility in the exchange rate so that exporters and importers who are dependent on the exchange rate can make informed decisions. Once we prevent volatility, the (export) concern of every sector including MSMEs will be addressed,” added Das. At the beginning of the pandemic, the rupee had closed at Rs 75.68 per dollar on March 31 and peaked to Rs 76.90.