SPV for crowd-funding, doubling of loans without collateral among other proposals.
To give micro, small and medium enterprises (MSMEs) a leg up, an RBI panel has recommended establishing a ?5,000-crore distressed assets fund, setting up a non-profit special purpose vehicle (SPV) to support crowd-funding, and doubling the limit for banks to extend loans without collateral to ?20 lakh.
The expert committee on MSMEs, headed by former SEBI Chairman UK Sinha, has suggested that the distressed asset fund assist units in clusters where a change in the external environment — such as a ban on plastics, or dumping of goods via exports — has led to a large number of MSMEs becoming non-performing. This fund will have to be of significant size to make equity investments that help unlock debt or revive sick units.
The committee said the MSME Ministry may consider setting up a non-profit SPV to support crowd sourcing of investments by various agencies, particularly to pave the way for a conducive business ecosystem for MSMEs.
Further, for the convergence of policies and creation of a promotional ecosystem, it has recommended the setting up of a National Council for MSMEs at the apex level under the chairmanship of the Prime Minister, with the ministers for MSME, Commerce & Industry, Textiles, Food Processing, Agriculture, Rural Development, Railways and Surface Transport as members.
All States should have similar councils for MSMEs, it added.
The committee further said that the Small Industries Development Bank of India (SIDBI), as a nodal agency, should ideally play the role of a facilitator to create a platforms wherein various venture capital funds can participate and, in turn, create a multiplier effect to provide equity support to MSMEs.
In this regard, the committee recommended the setting up of a government-sponsored fund-of-funds to support venture capital/private equity firms investing in the MSME sector.
The committee also recommended that the ‘PSBLoansIn59Minutes’ portal, which now caters only to existing entrepreneurs, be allowed to serve new entrepreneurs, too, including those applying for loans under the Pradhan Mantri Mudra Yojana and Stand-up India. The threshold of the loans should be enhanced to ?5 crore, it added.
Further, the committee said, all credit guarantee schemes — such as the Credit Guarantee Fund Trust for Micro and Small Enterprises and National Credit Guarantee Trust Company — should be subject to RBI regulation and supervision.