OST Business Bureau
Bhubaneswar, Jan 20:
With the state government having set a target of creating about 10,000 entrepreneurs at the grassroots level in the state in the next one year, the Micro, Small and Medium Enterprise (MSME) department has asked bankers to provide credit to young entrepreneurs to start their enterprises.
“MSME Department will make efforts to identify the youth having training in Entrepreneurship Development and who have a project to start the enterprise. A committee with representation of the department, Government of India offices and your office will scrutinise the projects and identify the worthy entrepreneurs, who may be considered for providing credit support,” said Panchanan Das, MSME secretary in a letter to SP Singh, convenor of State Level Bankers Committee (SLBC).
Das said that though there is an MSME component in the Prime Minister’s Employment Generation Programme (PMEGP), it is not enough to meet the increasing demand. Because of the subsidy component, many people who fulfil the criteria sometimes get covered under the scheme PMEGP, leaving the serious and genuine entrepreneurs high and dry, said the MSME secretary.
PMEGP, a centrally sponsored scheme has been formulated for generation of employment opportunities through establishment of micro enterprises in rural as well as urban areas.
“On receiving your consent, advertisement will be released to invite applications and also through our network at dispersed locations to identify the youth desiring to start new enterprise. This would be a win-win situation for both the bank and the entrepreneurs as you need business and the entrepreneurs need credit to do start a new enterprise,” read the letter.
MSMEs face challenges like inadequate access to finance, high interest rates, information asymmetry, vulnerability to market fluctuations, limited access to technology and market as well as lack of awareness of best practices followed by the industry etc.
A departmental analysis for the years 2011-12 and 2012-13 revealed that as many as 11 out of 25 public sector banks, along with four of seven private banks and four of six regional rural banks, have posted negative growth in credit flow to the MSE sector. Nine public sector banks have shown negative growth in MSE accounts.
The recommendation of the Prime Minister’s Task Force on MSMEs for a minimum of 20% annual growth in credit flow to MSEs and 10% in MSE accounts has been observed more in its breach. The stipulations have not been met even by the end of the quarter ending June, 2013.