As COVID calls time on many small business, CAIT requests MSME tag for 8 crore retailers

In order to make more businesses eligible for Priority Sector Lending (PSL) by banks, the Confederation of All India Traders (CAIT) has sought the restoration of MSME status rescinded by the government in 2017.

In the wake of ongoing slowdown as the need of providing financial support to Micro small and medium enterprises (MSME) has become more marked, CAIT Secretary General Praveen Khandelwal suggests to bring back retail and wholesale traders from the MSME category else they are forced to borrow at a higher rate or from informal financial sources because a vast portion of business lay out of the formal system is in the want of supportive facilities.

As per RBI’s guidelines, loan advancements to MSME come under PSL at concessional rate with the objective to promote these labour intensive businesses in the economy but according to banking sources by the end of annual closure in March about Rs 3 lakh crore loans given to them are at the risk of losing a tag of MSME loan.

Hence the burden of shortfall in the target of  many bank’s priority sector lending (PSL) will be borne by Small Industries Development Bank of India (SIDBI) or Micro Units Development & Refinance Agency Ltd (MUDRA).

“Traders are facing difficulty in getting loans from formal sources and even denied registration on Government e-Market (GeM) platform as there is no MSME tag attached to the business,” marked Khandelwal.

As MSME played a seminal role in developing economies like India, the flow of affordable credit from banks and smart policy actions if not help in greater formalisation of economy but will certainly open up securitization as a source of financing to help small businesses start up, flourish and mobilize the revenues.