India’s apex industry body Associated Chambers of Commerce and Industry of India (ASSOCHAM) wish-list to banks to improve credit flow to MSMEs:
- Managers of specialized MSME bank branches should be given more powers and flexibility.
- The specialized MSME branch should focus only on MSMEs.
- RBI should come out with stringent guidelines to Bankers to help MSMEs to get their payments from state and central government units as well as PSUs and large companies within 90 days.
- RBI along with other Mentors, including statutory Inspectors, should handhold a sick MSME unit for its revival.
- RBI should urge all banks to accept agriculture land as collateral, for funding SMEs. The SARFAESI Act needs to be re-looked to enable SMEs and farmers to avail institutional credit, against agri land, as collateral.
- The norms of the SME schemes must be defined more clearly by RBI.
- The loan amount needs to be decided not only on past performance but also the projections of the applying company.
- Central Government should put up a one stop solution agency in States for development of SMEs.
- Government should ensure the supply of trained and professional managers for the small scale sector.
- A separate trading exchange should be set up exclusively for the MSMEs.
- Provide special incentives for encouraging larger flow of Venture Capital & Private Equity funds into the sector.
- MUDRA should promote appropriate technology solutions.
- Tax Audit limit should be enhanced to Rs 3 Crore, as many of the small MSME units cannot afford the tax audit fees charged by Chartered Accountants.
- The VAT Audit limits should also be enhanced to Rs 3 Crore and these should also be allowed to be conducted by tax practitioners and Cost Accounts apart from Chartered Accountants.
- The Public and Private Sector Institutions like LIC and various Mutual Funds should invest at least 20% of their Investable Funds in the SME Initial Public Offering so that the Fund Inflows improve and boost the Investor Confidence.
- Some banks debit ECGC premium which they are not supposed to as per RBI guidelines.
