Various banks have together disbursed ₹2,724 crore to 48,655 individual micro, small and medium enterprises (MSMEs) in Karnataka as on June 22, 2020. The disbursals are expected to reach ₹10,000 crore to ₹15,000 crore by October, said trade body KASSIA on Monday.
Some 15 banks have participated in the initial disbursements that ranged between ₹1 lakh and ₹4 crore. Around 45 lakh industrial units across the country are expected to be covered under the Centre’s ₹3 lakh crore MSME revival package.
‘Hugely inadequate’
However, KASSIA said the amount was “hugely inadequate” as Karnataka itself has over 6.5 lakh MSMEs, and across the country there are over 10 crore MSMEs.
“There is a need for adequate working capital. The industry also needs finances at low cost, say at 4% to 6% interest on working capital with the least paperwork,” said R. Raju, president, KASSIA.
Concessions sought
The industry association called for concessions that can be made available for the entire financial year and beyond, if necessary.
Citing data, KASSIA said that in spite of increased finance to the MSME sector, there is an addressable credit gap of ₹25.8 trillion, which can be profitably financed by the formal banking and financing institutions. Highlighting the challenge of raising funds, the trade body further said that of the ₹69.3 trillion debt demand, 84% is financed by informal sources. Formal resource account only for 16% (₹10.9 trillion). Of this, the scheduled bank provide only ₹9.4 trillion.
