The SME Chamber of India has presented a series of strong suggestions targeted at improving finance availability for Micro, Small, and Medium Enterprises (MSMEs), as well as advocating for a permanent advisory framework to enable long-term policy implementation and address sector concerns.

Among the primary ideas, the Chamber advises that banks fund up to 90% of the project costs for new MSME units and allow accounts and loans to be transferred across banks. It encourages the construction of dedicated MSME helpdesks at branch levels and online to improve service delivery. Furthermore, the Chamber advocates for a relaxation of personal guarantees under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme, as well as simpler submission processes for loans up to Rs 5 crore and transparent bank rejection letters to assist entrepreneurs in their reapplication journey.

Financial Reforms

The Chamber also calls for waivers of prepayment penalties and processing fees for loans up to Rs 10 crore, the availability of affordable credit specifically for branding and international marketing activities, and the implementation of one-time settlement schemes with extended moratoriums tailored to stressed businesses. These financial reforms are viewed as critical to alleviating the working capital and growth constraints that MSMEs frequently encounter.

Addressing the governance gap in credit advice, the Chamber has noted the ineffectiveness of the current bi-annual Standing advice Committee, chaired by the RBI Deputy Governor. This committee suffers from discontinuity due to frequent membership changes, which impedes regular follow-up on MSME credit issues and recommendations. To address this, the Chamber suggests establishing a permanent Standing Advisory Committee with a defined three-year term. It envisions a body with full representation from all financial institutions, an RBI Executive Director as Member Secretary, coordination by the Indian Banks' Association (IBA), and permanent membership for leading national and state-level MSME associations registered under Section 8 of the Companies Act.

Chandrakant Salunkhe, President of SME Chamber of India and Federation of Indian SME Associations (FISA), emphasized that these pragmatic reforms and the establishment of a structured advisory mechanism are essential to empower MSMEs comprehensively. He highlighted the critical role of MSMEs in accelerating industrial growth in Tier-2 and Tier-3 cities and reinforcing India's journey towards becoming a developed nation.

"Without a structured and accountable framework for policy implementation and regular review, the sector’s concerns remain unresolved. A permanent Standing Advisory Committee will bring the necessary continuity, focus, and accountability," Salunkhe stated.

With MSMEs contributing considerably to India's GDP and employment, these recommendations might represent a watershed moment for the sector if implemented by policymakers and regulators, laying a solid platform for long-term growth and global competitiveness.
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