Micro units pin hope on seamless loans to beat crunch

Panaji: Union finance minister Nirmala Sitharaman’s assurance to increase the credit guarantee cover for micro enterprises from Rs 5 crore to Rs 10 crore could help address the pain of rejection that Goa’s 66,000 micro and small entrepreneurs often face while chasing banks for loans.

With Sitharaman calling MSMEs the second most important engine in the nation’s growth, local industrialists now hope that banks walk the talk while disbursing credit to the MSME sector.

Manguirish Pai Raiker, the chairman of Assocham–Goa, said that nine out of ten micro and small entrepreneurs under the Pradhan Mantri Rozgar Yojana (PMRY) get rejected, while most applicants for Mudra loans get turned away if they have not done business with the bank before.

“It is very common that most banks — I am talking about the micro enterprises — the banks are not keen on lending to them,” Raiker said. “Especially the Mudra loans that are for micro enterprises. This sector is struggling for funds. Their way of functioning is to take money from moneylenders who charge high interest.”

Raiker said that the Budget proposal to introduce customised credit cards with a Rs 5 lakh limit for micro enterprises registered on the Udyam portal can be a “game changer” for Goa’s small and micro enterprises.

According to data, 94% of the MSME units in Goa are in the micro category.

“The enhanced credit guarantee limit from Rs 5 crore to Rs 10 crore is a welcome step,” said Goa Chamber of Commerce and Industry vice-president Pratima Dhond.

The credit card system for Udyam-registered micro industries will alleviate credit finance issues, said Shrinivas Dempo, the chairman of Dempo Group.

Kalpak Arware, the president of the Verna Industries Association, said that the reduction in indirect tax rates and the removal of customs duties on several types of manufacturing equipment will aid export-oriented MSMEs and release the pressure on scarce capital.

Arware said that the announcements will provide a boost to exports. He also said that the resolution of the inverted duty structure is a “major win” for Goa’s manufacturing sector.


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