by on June 20, 2021

Finance Industry Development Council (FIDC) on Saturday has written to Nitin Gadkari, Minister for Micro, Small and Medium Enterprises (MSMEs) seeking measures to improve liquidity support for small and mid-sized non-banking financial companies (NBFC) for on-lending to MSMEs.

In its letter, the industry body requested the government to include wholesale and retail trade in the list of activities allowed for registration as MSME and also make consequent changes to the Udyam Portal.

Coming to Credit Guarantee Fund Scheme for NBFCs, FIDC has requested the government that all claims filed during FY21 (especially from 24th March 2021 to 31st March 2021) but not processed, be treated as claims for FY21 as a one-time exception.

According to Credit Guarantee Fund Scheme for NBFCs, which states that in order to lodge any claim under the CGS Scheme, the account should have been classified as an NPA as per RBI norms (installment is overdue for a period of three months or more) and the account should have completed the 12 months’ lock-in period requirement, post crystallisation of the portfolio.

The letter written by Mahesh Thakkar, Director General of FIDC recommended that Interest Subvention Scheme should be relaunched and be extended to both MSME and retail and wholesale traders. In absence of notification from the MSME ministry and RBI, the Interest Subvention Scheme cannot be utilized by the NBFC industry to support and give credit to its MSME customers.

After the government reduced guarantee coverage from 75 percent to 50 percent, FIDC has asked for the withdrawal of amendments made to the CGS-II Scheme with effect from April 1, 2021. It said the cap should be restored at 3x till the time normalcy in business operations of MSME is restored.

Posted in: Start Up
Topics: finance