Credit score development to MSME sector agency in 2022-23

 

The government of our country has been working to uplift small and medium enterprises for a very long time now. They recognise that this sector contributes to 30% of the GDP of the country and plays an irreplaceable part in providing employment to the citizens of the country. The small enterprises of our country have been overlooked because of the lack of knowledge of their existence and informal nature. Most of the surveys that take place for this sector, end up overlooking these small enterprises. Here is a summary of how much these small businesses contribute

 

Employment generated GDP contribution Exports contribution

120 million 30% 45%

 

The MSMEs also have smaller units and enterprises which form a part. Most of these enterprises are informal and do not have a decided annual turnover. In fact, 99% of these enterprises are micro-enterprises. A survey done in 2015-16 stated that around 62 million enterprises are working with approximately 20 in number. Amongst them, the majority are one worker units. These enterprises earn an income which is just enough to survive the business market. This sector thus has a good revenue for the government.

 

What is an MSME loan?

 

MSME is known as micro, small and medium enterprise loan and can be availed by a business or an enterprise. This type of loan is generally used by businesses to borrow capital which can be utilized for buying new machinery, purchasing inventory etc. A lot of lenders are available to lend these loans.

 

Some common rates at which the loans are available are below:

 

 

Interest Rate	7.65% p.a. onwards
Loan Amount	Rs.50,000 onwards
Loan Tenure	Up to 15 years

 

 

What is the Credit Growth to MSME Sector?

 

According to a survey done by SBI, the credit growth to MSMEs has expanded by Rs. 52,800 crores. This is against the degrowth or the decrease that happened during the same time last year which was for Rs. 61,000 crores.

 

The overall growth seems to be up by a whopping 14% and this has been the highest in the last three years.

 

Retail loans have seen an increase of Rs. 1.34 lakh crores. This has also been a sharp rise as against the degrowth of the same for Rs. 26,500 crores last year.

 

The data if classified sector-wise has indicated that the growth has doubled in the last few years

 

In the financial year 2023 it is expected that the credit and the deposits both will grow in double digits.

 

A decline can be seen in the first quarter fortnight for the deposits and credit. This is assumed to be due to the salary withdrawals in the first month.

 

MSME Latest Loan Rates

 

The latest loan rates and banks providing loans to MSMEs are given below

 

 

 

Bank Name	Interest rate
Allahabad Bank	At the discretion of the bank
Oriental Bank of Commerce	10.70% p.a. onwards
Andhra Bank	At the discretion of the bank
Central Bank of India	11.25% p.a. onwards
Indian Bank	9.75% p.a. onwards
Punjab and Sind Bank	9.95% p.a. onwards
Punjab National Bank	At the discretion of the bank
State Bank of India	7.65% p.a. onwards
Syndicate Bank	At the discretion of the bank
UCO Bank	8.85% p.a. onwards
Union Bank of India	At the discretion of the bank
United Bank of India	10.25% - 16.25% p.a.

 

 

 

MSME Loan Schemes

 

The following loan schemes are available to MSMEs

 

 

Name of Scheme	Sub-Schemes
1) MUDRA Loan	•       Micro-Credit Scheme •       Credit for Micro Finance •       Refinance Scheme for Banks •       Mahila Uddyami Scheme •       MUDRA Card •       Equipment Finance Scheme •        Credit Guarantee Scheme
2) Credit Guarantee Funds Trust for Micro and Small Enterprises (CGTMSE)	N/A
3) Prime Minister’s Employment Generation Programme (PMEGP)	N/A

 

Eligibility for MSME Loan

 

The following are the criteria for getting a MSME loan for a business or an organization

 

 

Particulars	Criteria
Type of business	•       Manufacturing Sector •        Service Sector
Manufacturing Sector	•       Micro - < Rs.25 lakh •       Small - < Rs.5 crore •        Medium - < Rs.10 crore
Service Sector	•       Micro - < Rs.10 lakh •       Small - < Rs.2 crore •        Medium - < Rs.5 crore

 

 

Documents Required for MSME Loan

 

The following documents may be required for availing the MSME loan

 

Particulars	Document Required
Proof of Identity	PAN card, Aadhaar card, Voter’s ID, passport
Proof of Residence	Rental agreement, ration card, utility bills
Proof of Business Address	Rental agreement, lease agreement, utility bills
Proof of Income	P&L account and balance sheet of last 2 years
Tax documents	IT returns, sales tax return, PAN card
Proof of securities provided	Copies of title deeds/lease deeds offered as securities
Other documents	Projected balance sheet, project report, etc.

 

MSME Registration

 

•       Click on the link https://udyamregistration.gov.in/Government-India/Ministry-MSME-registration.htm.

•       If you have not registered before, click on ‘New Entrepreneurs or business with EMII

•       You have to provide your name and Aadhaar details and click on ‘Validate and Generate OTP’. An OTP will be sent to your mobile number. Enter the OTP to authenticate. You will then have to provide the details of your PAN, and the organization you are a part of and validate it.

•       Provide all your personal details and the details of the industry or plant

•       After entering all the details on the site, click on ‘Submit and Get OTP’. An OTP will be sent. Enter the OTP after which you will receive a message for the successful registration.

 

Conclusion

We can conclude that Credit Score development in the MSME sector has seen a  good rise and is expected to maintain the same graph in the coming years.