FISME urges govt to review policies to help faltering MSMEs
FISME) has urged the government to review NPA classification rules, third-party rating of MSMEs and Quality Control Orders (QCO).
The key body representing MSMEs has also sought the government’s intervention in protecting export-oriented MSMEs and tweaking trade policies to reflect the growing contribution of Asia to global GDP.
Classifying loan accounts as special mention account (SMA) if interest or principal is due for 30 days stifles the MSME's growth.
“The normal banking operations to a grinding halt. This is creating false alarms and even resulting in forced closure,” FISME said in a representation to the commerce and industry ministry.
The body suggested “a liberal restructuring option be given to MSMEs affected by long Covid and geo-political turmoil.”
It also sought a review of third-party ratings also known as Bank Loan Rating (BLR) for MSMEs. These ratings are conducted by rating agencies geared towards listed companies based on ‘Return on Investment (ROI)’ and are unsuitable for rating MSMEs for short-term solvency.
“The results have been disastrous. Hardly any MSME got investment grade rating which means higher interest rates and demand for additional collateral security,” it stated.
The global geopolitical turmoil such as the Ukraine-Russia war, Hamas-Israel conflict and Red-sea crisis has detrimentally affected the MSMEs oriented towards exports.
The submission proposed setting up a dedicated Disaster Support Mechanism as “these disruptions can significantly impact MSME operations, finances,
