Credit outreach: UP govt to launch 'loan melas' for MSMEs in December

MSMEs accounted for 80% of state's exports worth Rs 1.14 trillion in FY19

Taking cue from the 'customer outreach' programme of the commercial banks, the Uttar Pradesh government has announced to launch similar 'loan melas' for the beleaguered micro, small and medium enterprises (MSME) next month.

The credit camps would be organised at all the 75 districts during 9-27 December on different dates according to the schedule to be drawn in consultation with the commercial banks and district officials.

These camps are aimed at offering loans to the MSMEs under various central and state government schemes, including UP's flagship one district, one product (ODOP) programme, which promotes the indigenous industries and handicrafts.

In UP, the MSMEs accounted for 80 per cent of the state's exports worth Rs 1.14 trillion in 2018-19. The credit outreach is expected to boost the sector for higher growth and job creation.

According to estimates, nearly 80 per cent of the country’s MSMEs, especially the micro units, still do not have access to institutional capital and they largely depend upon the unorganised players for meeting their financial needs.

UP MSME and Khadi principal secretary Navneet Sehgal has directed the district magistrates to ensure the success of the ambitious credit outreach initiative, which seeks to bridge the credit gap for the sector in the face of bankers' reluctance to lend apart from various procedural hurdles, such as requirement of balance sheet and collateral.

Meanwhile, the Yogi Adityanath government has also urged the bankers to improve the credit flow to the MSME sector in UP, and complained that the loaning process was quite cumbersome despite the new guidelines issued by the central regulatory authorities.

The government has decided to take stern action against officials of the laggard districts with regards to credit facilitation to the MSMEs, especially in the Devipatan, Azamgarh, Bareilly, Gorakhpur and Meerut divisions of the state.

The officials have also been directed to fix weekly credit targets and facilitate faster loaning process by establishing close coordination with the district lead bankers.

Earlier, such 'loan melas' were organised by the public sector banks in phases across 400 districts in India according to the guidelines issued by the department of financial services (DFS) under the union ministry of finance.

In fact, the Adityanath government is also framing a new export policy to give impetus to the MSME sector, including startups. The state has asked the Federation of Indian Export Organisations (FIEO) to prepare the draft of the policy, which is likely to be presented before the state cabinet for approval next month, Sehgal had told Business Standard recently.

According to the statistics shared by the MSME export promotion council (MSME EPC) here, UP had posted 100 per cent growth in the sector with the total number of units jumping from about 4.4 million in 2015-16 units to 9 million in 2017-18.