loans under MUDRA (Micro Units Development and Refinance Agency ltd), a financial institution set up by the Government of India for development and refinancing micro unit enterprises, are being subverted, according to the chief of a leading industries body in the country.
Om Prakash Mittal, president, laghu Udyog Bharati, an all India organisation in the service of small scale industries, told The Pioneer that MUDRA loan scheme conceived by Prime Minister Narendra Modi for helping micro, small and medium enterprises (MSME) and artisans was the best financial-aid programme seen in independent India.
“The scheme is meant for offering financial help to MSMEs which fall in the non-corporate segment. These enterprises, most of them operating under proprietorship had found it difficult to get loans from nationalised banks. The MUDRA scheme was launched taking into account the long pending demand of the MSME sector for cheap loans,” said Mittal.
Though the lUB president was all praise for the MUDRA scheme, he said there were many instances happening in the branches of nationalised banks resulting in the denial of such loans to the needy. “The Union Government may not be able to take action on this distortion. It is the officials in the branch level who play havoc with the MUDRA scheme by distorting the details about the disbursement of such loans. Branch level officials fudge details of loans disbursed under MUDRA scheme making it difficult for MSME proprietors to get cheap loans. Senior officials of the banks should take serious note of these developments lest a fabulous scheme like this go haywire,” said Mittal.
Entrepreneurs operating micro, small and medium units could avail finance upto Rs 10 lakh at subsidised interest under the MUDRA scheme. Many MSME proprietors, on condition of anonymity told this newspaper that banks are playing truant when they approach them with requests for MUDRA loan.
Mittal, who reiterated that the Central Government alone would not be able to tackle the issue. “There is politics behind the denial of the MUDRA loans. We should have a system in place to monitor that all MSME proprietors get the loans,” he said.
He also disclosed that lUB organisers are seriously thinking about a strategy to help out the MSMEs which are denied loans by banks. “We are working out a strategy by which the lUB itself can avail such loans from banks and directly finance the MSME units. Efforts are on to tap funds from Non-Resident Indians with the concurrence of the Union Government and use the same for financing the sector,” he said.
He said the lUB is present in 40 out of the 607 districts in the country. “We will have lUB units functioning in all the districts of the country by 2019, the silver jubilee year of the organisation. Entrepreneurs desirous of starting MSME units coud make use of the guidance of the local lUB,” he said.
The MSMEs as well as artisans are also facing severe hardship because of Goods and Services Tax, said Mittal. “The GST council have pooled all products manufactured in the MSMEs and the corporate sector. The finished products are charged 28 per cent tax and this has literally broken the backbone of the sector. The all India conference being held at New Delhi on September 9 and 10 would plead with the Government to rationalise this abnormality,” said Mittal. He pointed out that 45 per cent of the country’s export earnings was from the MSME sector which also is the largest employer after agriculture.