Parliamentary panel slammed for providing credit cards to MSME entrepreneurs
The Standing Parliamentary Finance Committee has proposed providing credit cards to MSME entrepreneurs, Economic Period (ET) reports.
The card is expected to help small businesses with working capital, provide business finance for their income and also help them provide capital loans at affordable interest rates.
The move is aimed at setting up a system of payment systems and amid ongoing attempts by the Small Industries Development Bank of India (SIDBI) to help small businesses access regular credit.
“The idea is that when you register on the Udyam portal, you automatically get a credit card which is the Vyapar credit card. Each institution can decide how much credit line they want to grant and thus establish your payment history,” said committee chairman Jayant Sinha, quoted in a report by the aforementioned publication.
The panel noted that less than 40% of the 6.34 existing MSMEs have borrowed from formal financial systems.
The total credit spread in the sector is expected to be around Rs 20-25 lakh crore currently. Sinha claimed that there is no reliable data regarding the companies operating in this sector and therefore advocated the creation of an integrated digital ecosystem.