The Finance Industry Development Council (FIDC) has urged the Ministry of Micro, Small & Medium Enterprises (MSME) to address issues faced by MSME borrowers and the NBFCs catering to these enterprises.
The industry body of retail NBFCs had a virtual meeting with Nitin Gadkari, the Minister of MSMEs on June 15. On Friday, FIDC wrote to the minister outlining the needs of the sector.
FIDC in its letter has requested the minister to include wholesale and retail trade in the list of activities allowed for registration as MSME and also make consequent changes to the ‘Udyam’ portal.
It informed the minister that retail and wholesale traders who contribute significantly to the country’s economy and are integral part of the business community have been excluded from the definition of MSMEs.
“Traders constitute around 35 per cent of total MSMEs in the country and are thus not eligible for liquidity support from the banking system and extension of priority sector benefits much needed for them,” it said.
The NBFC body has also urged that minister that all claims filed during FY21 (especially during March 24, 2021 to March 31, 2021) but not processed, be treated as claims for FY21 as one-time exception, otherwise this will be a huge financial loss to banks and NBFCs.
Among other measures, the letter written by Mahesh Thakkar, Director General of FIDC said that considering praise worthy contribution of the NBFCs during the pandemic and the current state of MSMEs and other small borrowers, including trading community, it is requested that NBFCs should be covered under above circular so that they can pass on the subvention credit pertaining to FY 20-21 to its MSME customers.
“We also request that the Interest Subvention Scheme be relaunched and be extended to both MSME and Retail and Wholesale traders,” it said.