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The role of Micro, Small and Medium Enterprises in all type of economies is well recognized. The same is more prominent in case of developing and emerging economies where MSMEs are considered as growth engines. Worldwide MSMEs contributes significantly in employment generation, equal distribution of national income, optimum utilization of local resources, poverty alleviation, rural development as well as mobilizing capital lying in the hands of private sector. MSMEs are integral part of the supply chain of large scale industries and provide vital forward and backward linkage to the overall industrial sector.

The sector contributes enormously to India's economic development and growth. The sector therefore offers an opportunity to the country to harness local competitive advantages for achieving global dominance. The importance of MSMEs in India is evident from the fact that MSME sector contribute around 9% in National GDP, about 45% in manufacturing output and 40% in total export of the country.

In Union Budget 2020-21, Government has announced the following initiatives for development of MSMEs:

  • Simplified new GST return system to be introduced.
  • Creation of Unified Procurement System in the country for providing a single platform for procurement of goods, services and works by Government e-Marketplace (GeM).
  • Introduction of scheme to provide subordinate debt for entrepreneurs of MSMEs
  • Release of National Logistics Policy clarifying the roles of the Union Government, State Governments and key regulators. It will create a single window e-logistics market and focus on generation of employment, skills and making MSMEs competitive.
  • Launch of app-based invoice financing loans product
  • In order to reduce the compliance burden on small retailers, traders, shopkeepers who comprise the MSME sector, it is proposed to raise the existing turnover threshold for audit limit by five times i.e. from Rs 1 crore to Rs 5 crore.

MSME Finance is a thrust area of lending for our Bank. Bank is actively participating in Government initiated schemes like Prime Minister Mudra Yojna, Stand-up India, Start-up India etc, established MSME focused Branches / Business Banking Branches/ Centralised Processing Centers and introduced MSME specific Loan Products/ Cluster Schemes for ensuring higher lending to MSME segment.

Challenges are always before MSME sector and there is a need to take these challenges head-on so that MSMEs can take active part in Nation Building process.


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