As per news reports, industry chambers, including Federation of Indian Micro and Small & Medium Enterprises (FISME), representing a wide section of the micro and small and medium enterprises (MSME) met RBI Governor Shaktikanta Das to apprise the Reserve Bank of India (RBI) about the credit and finance issues being faced by the MSME sector.
FISME, the umbrella organisation representing the MSMEs, asked for setting up of a separate track for dealing with non-wilful defaulters, classification of accounts into viable and non-viable categories and the creation of a viable, revival scheme for stressed MSMEs. They sought the Central Bank’s intervention in addressing non-performing assets (NPAs) in MSMEs.
To support the “Medium” enterprise actively, FISME in its presentation, pitched for specific support measures for units/accounts having exposure greater than ₹5 crores. The industry body also asked for Credit Rating Parameters (CRP) to be defined by RBI to bring transparency to the entire process.
FISME said that fresh guidelines needed to be issued on aspects such as dilution and eventual freedom from collateral, performance guarantees (PG) and the treatment of non-fund differently from fund-based limits. The statement presented by FISME to RBI Governor also read, “MSMEs should be considered at par with financial creditors and their dues should be secured in IBC and guidelines to be issues for Credit Rating Agencies for BLR rating.”
The trading in bills under the Trade Receivables Discounting System (TReDs) has the potential to be a very powerful tool not only for providing liquidity to MSME at reasonable cost, but also bring financial discipline among the corporate sector. The industry body has also pitched for an increased securitization of Accounts Receivables and acceptance of Trade Receivables across the sectors, and the need for more Bill Discounting entities of the platform.
Other major proposals submitted by Federation of Indian Micro and Small & Medium Enterprises included the demand for bank guarantees by insurance companies, whereby the Indian or foreign companies will be able to issue performance guarantees or bid bonds, and the demand for making available overseas funds in INR, with SIDBI collating and intermediating between groups of suitable borrowers and the overseas lenders.