The NDA Government at the Centre has given a major thrust to the Ministry of Micro, Small and Medium Enterprises (MSME). This is one of the core areas for “Make in India” programme launched by the Prime Minister Narendra Modi. KK Jalan, Secretary of the Ministry has been piloting various schemes for the MSME sector on behalf of the Government. Though he took over the charge on January 30 this year only, he has a complete grip on the subject and knows Ministry’s working inside out.
Jalan claims to have provided a new impetus to the sector by taking most of the Ministry’s work online. This includes conducting entire financing process digitally – right from receiving applications to disbursal of loans besides speeding up the work on online MSME data bank. SMEpost.com caught up with him for an in-depth conversion on various aspects of Ministry’s working. Here are the excerpts…
Q: What are the thrust areas of the MSME Ministry?
A: The biggest scheme of our ministry is Pradhan Mantri Employment Guarantee Programme (PMEGP). One third of our annual planned budget goes to this scheme. That means almost Rs 1200 crore out of a total budget of Rs 3000 crore of the Ministry is allocated for this scheme. The main job under this scheme has to be done by KVIC. We have launched a programme to monitor the progress of the scheme online and have also implemented it. As soon as we get a green signal from the Hon’ble Minister, we will check it and ensure that it reaches as many people as possible.
Q: How are you going to do it online?
A: All applications will be entertained online only. Even if somebody applies offline, our organisation administering various schemes will convert it into an online application.
Q: Will it usher in transparency and make the process faster?
A: Yes, our people will contact the applicant within 48 hours of submission of online application. They will conduct a telephonic interview with him to verify whether the application is genuine, whether the person is actually interested in embarking on entrepreneurship and whether he qualifies for the scheme. This interview would be recorded for greater transparency. He will be accordingly informed whether he qualifies or not.
We have also firmed an appellate committee to facilitate complaints. We at our end, too would be fathoming the cause of disqualifications. The application will then be sent to District Level Task Force Committee (DLTFC) where again it would be monitored. They will have to take a decision within one month. If they are rejecting the application, they will have to assign a reason. If no decision is taken within a month, the application will be deemed to have been accepted.
Q: There usually are complaints of bureaucratic delays. How will you cut the red tape?
A: Since district-level meetings are chaired by the District Collector (DC) and since he is a busy person, meetings keep getting postponed. We are changing that. Now onwards our meeting dates will be decided in consultation with the DC well in advance. But in case he gets stuck somewhere and can’t make it to the meeting, we won’t stop for him. Often the meetings remain in suspended animation for as long as six months because DC can’t spare time.
The meeting henceforth, can taken place in his absence also. In such a situation, GMDIC will chair the meeting to ensure faster decision making and rapid growth of the SME sector. We hope the applications will be cleared ideally in 15 days. But, in no circumstances, it should go beyond 30 days. Everything will be done online only.
Further, the approved applications would be sent online to the bank. Banks will have one month time to sanction or reject the loan. In case of rejection, bank will have to furnish reason. But, if we are not satisfied with the reason offered, we will speak to his regional manager or even the chairman of the concerned bank. We will monitor the unit’s performance for three years by conducting an appraisal every six months to check whether he has benefitted from the funds received or whether funds have been properly utilised.
Q: Financing was a major problem for this sector. We hope after everything goes online, decisions will be taken faster and in more transparent manner?
A: Financing an SME poses different problems. In some areas, NPAs have been very high which is why Banks are afraid of lending under PMEGP. In some other places recovery is good, so banks don’t have problem in financing MSMEs. For instance on my recent visits to Pollachi and Kerala, I found that the two places presented a contrasting picture. In Kerala NPAs were 83 per cent because of which banks were wary of lending to MSMEs, whereas in Pollachi NPAs are just 7 per cent hence banks had no issues in lending by the banks. Now once we come into the picture and will be doing handholding, the bank would become increasingly relaxed and accommodative.
Q: Will you be conducting some study on the reason why NPAs are so high in some particular places?
A: Yes, of course. Evaluation studies should be done and we have taken decision to proactively go for such evaluation studies on cluster of industries frequently going into the red.
Q: Kindly elaborate how the Ministry is going to implement Mudra scheme?
A: This scheme actually does not belong to our Ministry but is very beneficial to MSME sector. This schemes run by the Departmental of Financial Services envisages a loan of Rs 10 lakh will be treated as Mudra Loan. This loan is not entitled for subsidies. But, if someone takes a loan of less than Rs 10 lakh, it can be classified as Mudra loan.
Q: How can SMEs take advantage of financing through share market?
A: This option comes with the baggage of Companies Act provisions which prohibit the ease of doing business. So, a company worth Rs 10 or 20 lakh might not be able to afford the cost of compliance of Companies Act. So, I feel there should be a separate Companies Act for SMEs which will facilitate easier funding for SMEs through stock markets. We are already in talks with NSE and BSE to conduct some programmes wherein we will inform at least middle level industries of ways and means of generating equity participation and its benefits.
Q: Number of Internet users is going to touch 500 million by 2020. How do you propose to benefit from this revolution?
A: Now most of our schemes are run by development commissions. They run these schemes online only. We have been receiving applications on a portal called MyMSME. We also propose to launch an app. Once this is accomplished, all Government schemes will be available on your hand-held devices as well. Soft copies of all documents can be submitted online. We hope this will reduce people’s problems and our burden.
Q: Another problem faced by MSMEs is marketing. The Government does help them by organizing some international exhibitions. But they are too far and in between. How can the Government help them?
A: Yes, we are already organising exhibitions to promote products manufactured by SMEs. Now we wish to help SMEs by offering assistance for such fairs. We also organise some seminars for them to offer technical and marketing help. We have initiated Public Procurement Policy since April 1, 2015 and made it mandatory. We convened a meeting of PSUs on March 17 under chairmanship of Hon’ble Minister. We have also constituted an advisory committee. Two meetings of this committee have already taken place. Besides, our public procurement scheme too is aimed at helping out MSMEs in a big way. This means 20 per cent of all government purchases have to be necessarily done from MSMEs.
Q: How is the Credit ratings scheme going on?
A: We have constituted a committee under a joint secretary to review this scheme. It submitted its report only recently. We have put it in public domain for comments from stake holders. They too have submitted their comments by April 6. Now we are compiling them and after making suitable changes will relaunch the credit rating scheme soon.
Q: Wouldn’t banks benefit from credit rating schemes? For they would henceforth know, which industry is lending-worthy?
A: Our present credit rating scheme had not been synchronized with banks so far. Banks ratings are – AAA, BB, BB+ etc. We were not doing such ratings so far. The ratings we were doing through credit rating agencies were SA1, SA2 etc. Now, we will be syncing the two ratings.
Q: How is Udyog Adhar Memorandum (UAM) scheme faring so far?
A: There were two schemes earlier UAM1 and UAM2 which have been simplified now. But, we haven’t received a positive feedback from the state governments. So, now we have relaunched the UAM in the shape of an online MSME data bank. This data bank to be launched next month would be providing complete one stop information about a particular industry.
Q: Would UAM shut down after that?
A: No. UAM will continue. UAM is the initial thing and through it only we will get the required information for MSME data bank.
Q: How long will it take you to complete one million registrations?
A: We have been receiving about 20 thousand registrations every day. We have already received 4.5 lakh registrations so far. You can very well figure out how long will it take us to reach one million landmark.
