UP govt to tap World Bank arm IFC for easy capital flow to MSME sector

IFC country head likely to visit Lucknow soon to hold further talks

Uttar Pradesh government has initiated preliminary talks with the International Finance Corporation (IFC) seeking easy flow of capital to the Micro, Small and Medium Enterprises (MSME) sector in the state.

Apart from facilitating easy availability of credit to MSMEs, the state government is also looking at reviving sick units for spurring economic activities and job creation.

UP MSME minister Sidharth Nath Singh said a meeting with senior IFC officials had already taken place and its country head was likely to visit Lucknow soon for taking the issue forward.

The state has nearly 9 million MSMEs, comprising almost 14% of the domestic MSME space. Meanwhile, UP had clocked highest growth in the domestic MSME credit flow with total outstanding of Rs 57,000 crore at the end of December 2017.

IFC is private sector lending arm of the World Bank Group and since 1956 had facilitated investment of nearly US$ 15 billion in Indian companies. Unlike commercial banks, IFC is a refinance agency and conducts lending by investing in Non Banking Financial Companies (NBFCs) and microfinance institutions (MFIs), who later lend to MSMEs.

“The state government will handhold MSME sector and play the role of a facilitator, rather than conduct business activities itself. Under the Yogi Adityanath dispensation, the IFC has also acknowledged the positive transformation in the state business climate and its propensity to deliver,” Singh said addressing a MSME conclave here yesterday.

He informed the state government was actively looking at different ways of filling the credit gaps in the MSME space, including cash flow hurdles and legal framework.

“We are also considering issuing fresh guidelines and policy framework for the sector to help them cope over working capital requirements. Such talks have also been held with SIDBI and Bank of Baroda in this regard,” he added.

The minister noted UP was a consumer state unlike industrial state like Gujarat and Maharashtra even as he pointed to high growth rates in the Gross State Domestic Product (GSDP) and per capital income to indicate accelerating economic activities and wealth creation in the state.

“The government will soon make ‘Nivesh Mitra’ portal a functional single window clearance system to address grievances of industry at one place. We will ensure that MSMEs and industry get their promised subsidies on time without hassles,” he underlined.

Between December 2016 and December 2017, UP posted MSME credit growth of 21%, which was double compared to corresponding figures in Gujarat and Maharashtra having growth of 10.7% and 10% respectively.

In value terms, MSME credit flow to Maharashtra topped at Rs 1.23 trillion, which was more than double compared to UP at Rs 57,000 crore. Tamil Nadu, Gujarat and Andhra Pradesh also logged higher MSME credit flow of Rs 82,000 crore, Rs 67,200 crore and Rs 67,100 crore respectively.