Karnataka Small Scale Association Pushes for 59-Minute Loan Approvals & Simplified Credit Processes for MSMEs

Mumbai, Jul 9 (KNN) The Karnataka Small Scale Industries Association (KASSIA) presented a comprehensive list of banking-related issues at a high-level meeting convened by the MSME Division of the Financial Inclusion & Development Department, Reserve Bank of India (RBI).

KASSIA, drawing upon its extensive experience in representing the interests of MSMEs, put forth several key proposals aimed at streamlining banking processes and enhancing access to credit for small businesses.

One of the primary recommendations was the reinstatement of the 59-minute loan approval mechanism for MSMEs, particularly under central government schemes.

Another crucial proposal was the elimination of the annual renewal requirement for cash credit facilities. Many businesses face challenges when required to submit identical data every year, especially when there are no changes in their working capital limits.

This repetitive process imposes unnecessary burdens on business owners, both in terms of providing historical data and the associated processing fees charged by banks for simply extending existing limits.

KASSIA also advocated for modifying the frequency of stock statement submissions to half-yearly or yearly. This adjustment is particularly relevant for process industries where SMEs are involved, as significant variations in stock levels do not occur on a monthly basis due to factors such as products being in intermediate stages or ongoing installation processes.

The association emphasised the need for quick loan approvals, with a particular focus on accelerating the application process for central government schemes.

KASSIA also proposed the introduction of GST-linked loans, where banks would evaluate loan approvals based on GST payments and available cash flow for short-term financing. This approach helps prevent the tying up of working capital due to demands for statutory compliance, offering a more flexible financing option for MSMEs.

Lastly, the association called for the development of tailored banking solutions by creating separate lists for manufacturers and traders in the MSME sector. This categorisation would allow businesses to receive financial services that suit their unique needs and objectives, recognising the diverse requirements within the MSME landscape.

The meeting, jointly presided over by RBI Deputy Governors M. Rajeshwar Rao and J. Swaminathan, took place on Monday.

(KNN Bureau)