Govt expects to finalise roadmap for MSME bad loans by March

New Delhi: The government expects to finalise a road map for resolving the bad loans issue in the MSME sector by March, Union Minister Giriraj Singh said.

"We keep meeting (officials from) the Reserve Bank and the finance ministry. We are designing a road map to address (the bad loans of MSMEs) and are hopeful that a road map will be ready by February-March," Singh told reporters here on Tuesday.

On the online lending to MSMEs, the minister said a trial run conducted for Prime Minister's Employment Guarantee Programme was successful and transparent and the model may be taken forward.

The government will soon announce measures to effectively tackle the non-performing assets and stressed accounts of micro, small and medium enterprises, a move which will considerably ease the cash flow challenges faced by them, Finance Minister Arun Jaitley had said last week.

Unveiling the last full-year budget of the current BJP- led government in Parliament, Jaitley said online loan sanctioning facilities for MSMEs will be revamped for prompt decision-making by banks.

On the comprehensive policy framework for MSMEs, Panda said it was being formulated in conjunction with the DIPP which is working on the new industrial policy.

Asked about reports of self-employment data being included by NSSO in its jobs data, Panda said a comprehensive database will be created collating employment inputs from various departments.

The Budget also proposed to include more small and medium firms under a reduced corporate tax rate slab, where it planned to extend benefit of the reduced corporate tax rate of 25 per cent for companies with turnover of up to Rs 2.5 billion.

"We are taking a series of measures to make sure that the MSME sector more robust and so the perception of bankers is clear about (lending). Naturally, then rates will go down," Development Commissioner MSME Ram Mohan Mishra said.

The MSME Secretary highlighted the measures being taken by the government towards easier flow of credit to MSMEs.

"Earlier the corpus of the Credit Guarantee Fund was Rs 2,500 crore. With a Rs 2,500 crore corpus, the cumulative loan given in the MSME sector was almost Rs 1.3 lakh crore... In the meantime the corpus has been increased from Rs 2,500 crore to Rs 7,500-8,000 crore. It gives a little more comfort to the bankers," Panda said.

He said the government was taking other decisions on structural reforms like including NBFCs and scheduled commercial banks, measures likely to lower the cost of capital.