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MSME & START-UP BULLETIN, VOLUME 1, ISSUE 1, AUGUST 2022

traditional MSME businesses where (salient causes)  Bring in respective SFCs (State Finance
Corporations) and IDCs (Industrial Development
 MSMEs did not see the digital age coming fast. Corporations) work in tandem with SLBCs.

 Their ecosystem had just their buyers and  Like Banks, this new team of SFC and IDC
suppliers. should be given a lending target of 80 percent to
priority sector and 50 percent (out of that 80) to
 Buyers were more important than suppliers. MSEs in rural areas.
 E-markets were ignored out and out.  Fintechs reaching out to MSMEs with banking
services may be included in the SLBCs.
 They did not alter their working as Many to One
(supplier to buyer).  SIDBI and NABARD may select and form a

team of Fintechs and MFIs with some vintage
 Non-traditional means of funding (borrowing at and larger distribution reach.
exorbitantly higher interest rates).
 Selected and deserving Fintechs should be
 Funds were not used properly in the business.
given funds to deploy to MSMEs in rural
 A strong rapport with lenders was not areas. A different credit assessment mechanism
established. (differentiated than banks’) for MSMEs should
be devised, where cash fl ow based lending with
 Digital mode of banking was not opted for. partial collateral is guaranteed.

There could be many more reasons (besides Covid  A LTC-LIR (Low ticket credit, lower interest
driven ones) but the above ones are so gullible that rate) model lending to MSEs can be initiated for
MSMEs can sit back, discuss, debate and deliberate Agri and Food producing units.
upon.
Glancing through Governments’ help:
Attention! we need MSMEs: The Covid-19 crisis saw some new steps being
The silver lining during the bygone unseen tough taken by countries for their MSMEs. This shows the
times for businesses, during Covid, could be the prompt seriousness of even developed economies towards their
policy measures and acts of the Governments, across MSMEs. Some interesting moves pertaining to MSME
the globe. All this, once again, proved that if MSMEs support by different countries are as below:
are to sustain, crystal clear policy guidelines are to be
written and implemented. There will come the need for  Denmark came up with “Salary compensation
changes and reworking at regular intervals of time but and loan guarantee”.
the existing ones must be accepted and adhered to by
all the stakeholders and ecosystem players.  France guaranteed (up to) 90 percent of liquidity
enhancement loans.
Other than the central government’s initiatives, state
level ones might come handy towards helping MSMEs  Germany came up with “Quick loans to MSMEs
upgrade their overall operation and working on and depending upon turnover”.
with technology, industry associations can be the nodal  Italy extended loan repayment suspension along
bodies to promote competitiveness amongst members with special assistance to start up enterprises.
(MSMEs), long pending slow development of clusters
(even the smaller ones) in tier-II and tier-III towns and  Spain gave “Relief in payment of energy bills
locations, providing strong infrastructure in terms of (gas, electricity) and liquidity measures designed
electricity, roads and water, raw material supplies and to compensate for closure or losses and targeted
last but not the least fi nancial assistance to MSMEs. towards maintaining employment.

Let us explore:  Loan guarantee upto 80% and bounce back loan
Few of the areas that may add value and create (25% of turn over) for six years with one year
catalytic support to MSMEs could be: moratorium in the UK is worth mentioning.

The Institute of Cost Accountants of India 29