Aiming to provide cheap finance to the micro, small and medium enterprises (MSME) sector, the state government is mulling to set up asset-based lending to mitigate the financial crunch faced by them due to the COVID-19 pandemic.
The new financial arm will be a joint venture (JV) between UP Industrial Consultants Limited (UPICO) and UP Laghu Udyog Nigam Limited. The new entity, to be supported by the National Small Industries Corporation (NSIC), will offer loans at attractive rates to small and medium enterprises.
The ABL or asset-based financing, is the business of offering credit, secured by collateral by way of inventory, receivables, equipment or other property owned by the borrower.
“We are working with the NSIC for a proposed asset-based lending entity. A concept paper is being prepared in this regard. The Board of UP Laghu Udyog Nigam Limited has also cleared the proposal for setting up the ABL for the benefit of the MSME sector,” Additional Chief Secretary (MSME and Export Promotion) Navneet Sehgal said in Lucknow on Tuesday.
Further, the government has decided to push for developing industrial enclaves spanning 5-50 acres under public private partnership (PPP) model to boost local economy in UP.
Following the lockdown, the state’s MSME sector came to a virtual standstill, barring those engaged in producing and supplying essential commodities viz. food, medicines etc. The government has been taking measures to facilitate speedy revival of economic activities.
During lockdown, the state government, through various measures, arranged working capital credit of more than Rs 26,000 crore to about 10 lakh MSME units.
The beneficiaries comprised nearly 4.35 lakh existing and 5.4 lakh new units across different segments.
Meanwhile, UP Laghu Udyog Nigam’s Board also approved the proposal for setting up of flatted or vertical factory complexes in four districts at an investment of Rs 345 crore.
The flatted factory concept is about an industrial building of more than one storey. The complex is subdivided into separately occupied units used for manufacturing, assembly and associated storage functions.
Flatted factory complexes will be set up in Gorakhpur, Ghaziabad, Agra and Lucknow for non-polluting industrial units. It is expected to overcome the scarcity of space for new industries and to promote start-ups.
The blueprint for Agra flatted factory complex has already been drawn and it will entail investment of Rs 185 crore and accommodate 245 units.