Page 32 - Banking Finance October 2024

ARTICLE

Limited access to institutional finance for micro-
enterprises: Micro-enterprises, forming the backbone
of the MSME sector, often find it challenging to access
formal credit due to their small size and informal
nature of operations. A street vendor or a small
grocery shop owner might rely on moneylenders for
capital, often at exorbitant rates.
Access to Finance: Limited access to credit hampers
business expansion and innovation.
Infrastructure Deficiencies: Poor infrastructure,
including electricity and transportation, increases
operational costs.
MSMEs through a comprehensive suite of financial
Market Access: Finding suitable markets for
solutions and initiatives:
products can be challenging, especially for rural-
Mudra Loans: Tailored loan schemes under the
based MSMEs.
Pradhan Mantri Mudra Yojana (PMMY) cater to
Technology Adoption: Lack of digital literacy and
micro and small enterprises, providing collateral-free
awareness hinders technology adoption, which is
loans to empower them to start and grow their
crucial for enhanced productivity and
businesses. Under Pradhan Mantri Mudra Yojana
competitiveness.
(PMMY), In FY24, In FY24, Rs. 5.41 lakh crore
Raw Material Costs: Fluctuations in raw material (US$ 64.87 billion) was sanctioned under 6.6 crore
prices impact profitability. Mudra loans to non-corporate and non-farm MSEs.
Skilled Labor Shortage: Availability of skilled Stand-Up India Loans: This dedicated scheme
manpower is often a challenge, especially in certain offers loans to women and SC/ST entrepreneurs,
sectors. fostering inclusive growth and promoting women's
Regulatory Compliance: Complex and time- entrepreneurship and facilitate bank loans between
consuming regulatory requirements can be a burden Rs. 10 lakh and Rs. 100 lakh.
for MSMEs. Credit Guarantee Fund Trust for Micro and
Competition: Increasing competition, both domestic Small Enterprises (CGTMSE): Collateral free loan
and international, can affect the growth and up to a limit of Rs. 500 lakh (w.e.f. 01.04.2023) to
sustainability of MSMEs. MSEs (Micro Small Enterprises) with guarantee
coverage up to 85% for various categories of loan
Empowering MSMEs by Indian Public Sector through Credit Guarantee Fund Trust for Micro and
Small Enterprises (CGTMSE) under Credit Guarantee
Banks
Scheme.
Indian Bank, a leading public sector bank, recognizes the
pivotal role of MSMEs in propelling India's economic Subsidised Interest Rates: Competitive interest
rates on loans make financing more accessible and
growth. The gross bank credit deployed to MSMEs under
priority sector lending in October 2023 amounted to US$ affordable for MSMEs.
279.18 billion, marking a 22.8% increase from the Flexible Repayment Options: Understanding the
previous year and an 11.8% rise from September 2023, dynamic cash flow needs of MSMEs, Indian Bank
according to the latest RBI data on sectoral deployment. offers flexible repayment schemes to ease the
The bank has taken a proactive approach to support financial burden.

BANKING FINANCE | OCTOBER | 2024 | 29