Now, an app to complain when banks deny loan to MSMEs

MSMEs denied loan by banks can complain on a dedicated govt app: Nirmala Sitharaman

Union Minister for Finance and Corporate Affairs Nirmala Sitharaman. (PTI Photo)

Small businesses, fret not if the loan is denied by banks. An app-based loan financing system of government will soon start tracking the banks who deny credit to MSMEs and ensure that the loan is disbursed in time.

The affected MSMEs only need to file a complaint on the app with a copy to the bank manager.

Finance Minister Nirmala Sitharaman said on Saturday that the government would soon launch the system to ensure capital to MSMEs, vital to keep the wheels of the economy moving.

The assurance came two days after the Reserve Bank of India (RBI) announced extending the window of one-time loan recast to small businesses till December 31. More than 5 lakh MSMEs had benefited from the restructuring of loans permitted by RBI last year.

On concerns of such easy loans adding to non-performing assets of banks, the minister said the government will prevent the MSME loans from turning into bad loans.

Earlier banks resorted to phone-banking for loan disbursal. They lent "uncles and brother-in-laws" which resulted in high non-performing assets (NPAs). "It took four years for us to set right the NPA. A lesson has been learnt on how to prevent that,” Sitharaman said at the post-budget press meet in Chennai.

The finance minister had in her budget speech said that the government would introduce a scheme to provide subordinated debt for MSME entrepreneurs, which would be fully guaranteed through the Credit Guarantee Trust for Medium and Small Entrepreneurs (CGTMSE). The corpus of the CGTMSE would accordingly be augmented by the government.

She had also said that the government would soon launch an app-based invoice financing loan product to obviate the problem of delayed payments and consequential cash flows mismatches for the MSMEs.

MSMEs employ over 11 crore people and contribute about 27% to the country’s economy. Their contribution to total manufacturing output in the country is above 40% and to exports is about 40%. There are over 6.5 crore MSMEs in India.

On concerns of pending goods and services tax (GST) dues to states, especially Tamil Nadu, which has raised a Rs 40,000-crore claim, the minister said the dues of all states would be cleared in two months.

She informed that the government was considering data analytics, data from income tax filings, exports and imports to identify people and businesses evading tax.