Active Stocks
Fri May 24 2024 15:59:27
  1. Tata Steel share price
  2. 174.80 -0.37%
  1. NTPC share price
  2. 374.85 0.68%
  1. State Bank Of India share price
  2. 828.60 -0.45%
  1. ITC share price
  2. 436.10 -1.16%
  1. Power Grid Corporation Of India share price
  2. 318.50 -0.39%
Business News/ News / India/  Centre looks at ways to increase equity investments, financing in MSMEs
BackBack

Centre looks at ways to increase equity investments, financing in MSMEs

Meeting discussed leveraging the Self Reliant India Fund for equity financing, increasing funding for unorganized sectors, and introducing new guarantee schemes to support small businesses.

The SRI Fund with a provision for a ₹50,000 crore corpus was launched in 2020, out of which ₹10,006 crore would come from the Centre and the rest from private capital or venture capital funds. (Photo: Mint)Premium
The SRI Fund with a provision for a 50,000 crore corpus was launched in 2020, out of which 10,006 crore would come from the Centre and the rest from private capital or venture capital funds. (Photo: Mint)

New Delhi: The Union government is looking at ways to increase equity investments in micro, small and medium enterprises (MSME) and raise financing opportunities for such small businesses, particularly in the informal sector.

In a meeting on Monday, the Union ministry of MSMEs, the department of financial services under the finance ministry and industry bodies representing MSMEs discussed these issues.

“The meeting discussed on deepening the equity financing of MSMEs through the SRI Fund (Self Reliant India) and increasing the financing of businesses in unorganized sectors," said an official aware of the developments, adding that investments from the SRI Fund has not been as high as anticipated.

Queries sent to the ministries of MSME and finance remained unanswered till press time.

 

The SRI Fund was launched in 2020 with a provision for a 50,000 crore corpus, out of which 10,006 crore would come from the Centre and the rest from private capital or venture capital funds. The ministry of MSMEs last month tweeted saying that about 7,593 crore investment has been ploughed into 425 MSMEs in the past three years. In addition, 51 daughter funds—an alternative investment fund—have been empanelled under the NSIC Venture Capital Funds (NVCFL).

 

NVCFL, which operates as Mother Fund in SRI Fund, was registered as a Category-II Alternative Investment Fund (AIF) in 2021.

The departments also discussed the need for new credit guarantee schemes along with standardizing procedures in current guarantee schemes.

Credit guarantee

Credit guarantee schemes have been a way to ensure liquidity for these small businesses, which were the worst hit by the pandemic and demonetization. In 2020, the government also launched an emergency credit line guarantee scheme to help stressed businesses access more loans backed by a sovereign guarantee.

 

Now the government is looking at the need for a new credit guarantee for the scheme and also to standardize the process across these different schemes.

In its recommendations to the ministry, the Federation of Indian Micro and Small & Medium Enterprises (FISME) said that specific credit guarantees could be promoted to cushion the risk perception of lenders based on gender, social, regional, class, age, and education biases.

 

Bank credit deployment for micro and small businesses stood at 6.33 trillion as of 24 March 2024, and that for medium enterprises stood at 2.68 trillion, according to data from the Reserve Bank of India’s bulletin for April released on Tuesday.

Digitization discussed

On Monday, central government departments also discussed on digization of these smaller business, mostly in the organized sector, for financial transactions. It focused on increasing the usage of digital public infrastructure platforms such as account aggregator, GSTN and GST Sahay.

They focussed on developing a common platform for sharing information regarding enrolment processes, common documents for various government schemes, along with adopting digital platforms such as e-KYC and ‘Digilocker’ to streamline the onboarding processes of MSMEs for availing various financial services.

The industry stakeholders have been asked to come up with recommendations and suggestions in the next few days.

You are on Mint! India's #1 news destination (Source: Press Gazette). To learn more about our business coverage and market insights Click Here!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 23 Apr 2024, 07:23 PM IST
Next Story footLogo
Recommended For You