MSME bodies raise critical financing issues before parliamentary committee

The micro, small and medium enterprises (MSMEs) industry bodies on Thursday made representations before the Parliamentary Standing Committee on Finance regarding challenges surrounding Special Mention Accounts (SMA), Bureau of Lending Rating (BLR), and the lack of effective grievance redress mechanisms for MSMEs, according to sources.

 

“The industry highlighted issues impacting industry access to finance before the Parliamentary Standing Committee on Finance in a session,” said a source.

 

For a long time, the Federation of Indian Micro and Small & Medium Enterprises Industry (FISME) has been requesting an extension of the threshold period for stressed loan accounts under the Special Mention Account-2 (SMA-2) category to 180 days from 90 days currently.

 

“The current SMA classification triggers penal actions even for minor delays (SMA-0), impacting credit score (SMA-1), and restricting credit access (SMA-2). This rigidity disregards genuine reasons for delays, such as late payments from buyers,” FISME said earlier.

 

Another source said that the representatives highlighted the pressing concerns that continue to hinder MSMEs’ smooth access to credit, especially in the wake of recent financial disruptions.

 

“The detailed discussions were met with thoughtful and probing questions from well-informed Parliamentarians, demonstrating their understanding of the complexities involved in the MSME financing ecosystem. The Parliamentary Committee, which is expected to release a detailed report soon, will include a thorough Action Taken Report addressing the points raised by FISME. This marks a crucial step towards ensuring the financial challenges faced by MSMEs are brought into focus and concrete measures are taken to resolve them,” said an industry source.

 

The meeting was attended by officials from the Ministry of MSME, additional development commissioners, the Department of Financial Services, along with the heads of the Small Industries Development Bank of India and the National Small Industries Corporation.