Banks need to handhold MSMEs to push job creation: Rajiv Kumar

New Delhi: Banks need to handhold the micro, small and medium enterprises (MSME) sector and help it grow as the entities form the backbone of the economic activity and generate a number of jobs, said Financial Services Secretary Rajiv Kumar.

The government's decision to provide Rs 2.11 lakh crore capital support through various means, including Rs 1.35 lakh crore of recapitalisation bonds, will not only strengthen the balancesheet of the state-owned lenders, but help them support industries and MSMEs, he told PTI.

Citing two major problems of the MSME sector, Kumar said they face cash crunch and limited market access.

"We are tackling these in four ways. First, we are registering all major suppliers on the TReDS (Trade Receivables electronic Discount System) that will make it obligatory to pay dues after a fixed time," he said.

Second, the udyamimitra portal will help bring in a culture of competitiveness among banks to finance MSME projects, he said.

"If you have a good project, you don't have to keep running after banks, they can compete and a good rating project would attract a better competitive rate," he explained.

On the market access side, Kumar said the government is trying to aggregate demand through GeM (Government electronic Marketplace) and the campaign has already started with Chhattisgarh. Besides, there are efforts to bring them on other e- commerce platforms.

"MSMEs can register to increase their access. Under the GeM rule, payment is guaranteed. After a specific time, payment is granted," he said.

Emphasising that the country has a strong MSME base, he said there will be a strong push on enabling growth of MSMEs through enhanced access to financing and markets and a drive to finance MSMEs in 50 clusters.

"Meerut for sports goods, Ludhiana for garments, Moradabad for brass work, Bhadohi for carpet, Bhagalpur for silk all these are facing problems of cash, market access and branding," he said, adding that they are getting exploited despite having demand for their products.

"We have to address this... banks can focus on these because there are a lot of latent entrepreneurship as the prime minister has said they can become job creators. We have created a 360-degree approach. Mudra, Stand Up India and Start Up... essentially focus on MSMEs, address their problem and do handholding," he said.