Need for separate financial architecture for non-corporate small businesses
Updated: Sep 05, 2014 03:01:08pm
New Delhi, Sept 4 (KNN) Eminent economist and financial advisor, S Gurumurthy has said that the country needs a separate financial architecture for non-corporate small businesses with a non-Basel composition in the form of 20-30 small business finance institutions.
Gurumurthy was speaking at a national round table conference organised by the Action Committee for Formal Finance for Non-Corporate Small Business here recently, according to a report from The Hindu, Business Line.
Banks are averse to funding the non-formal sector — which is largely unregistered — because of the high human resource costs of lending, and also due to Basel norms, which make it difficult to finance even registered MSMEs, leave alone unregistered small businesses, the report quoted the economist as saying.
Although most underserved financially, the MSME sector according to him contributed a value addition of Rs 6.28 lakh crore a year.
In a bid to develop a viable financial architecture for non-corporate small businesses across the country, prominent stakeholders in the Indian economy have forged an alliance under the banner of ‘Action Committee for Formal Finance for Non-Corporate Small Business (ACFF)’.
Recently, the committee launched a nationwide advocacy campaign in the capital to support the government to achieve the declared policy of formation of a separate financial architecture for non-corporate small businesses.
The Action Committee was formed in the wake of finance minister Arun Jaitley’s announcement on this subject in his Budget speech, where he called for the constitution of a special committee of officials from the finance ministry, micro-, small and medium enterprises (MSME) ministry and the Reserve Bank of India (RBI) to develop new financial architecture to support small business finance.
Similar round-table conferences are likely to be held in various cities in due course. (KNN/ES)
Gurumurthy was speaking at a national round table conference organised by the Action Committee for Formal Finance for Non-Corporate Small Business here recently, according to a report from The Hindu, Business Line.
Banks are averse to funding the non-formal sector — which is largely unregistered — because of the high human resource costs of lending, and also due to Basel norms, which make it difficult to finance even registered MSMEs, leave alone unregistered small businesses, the report quoted the economist as saying.
Although most underserved financially, the MSME sector according to him contributed a value addition of Rs 6.28 lakh crore a year.
In a bid to develop a viable financial architecture for non-corporate small businesses across the country, prominent stakeholders in the Indian economy have forged an alliance under the banner of ‘Action Committee for Formal Finance for Non-Corporate Small Business (ACFF)’.
Recently, the committee launched a nationwide advocacy campaign in the capital to support the government to achieve the declared policy of formation of a separate financial architecture for non-corporate small businesses.
The Action Committee was formed in the wake of finance minister Arun Jaitley’s announcement on this subject in his Budget speech, where he called for the constitution of a special committee of officials from the finance ministry, micro-, small and medium enterprises (MSME) ministry and the Reserve Bank of India (RBI) to develop new financial architecture to support small business finance.
Similar round-table conferences are likely to be held in various cities in due course. (KNN/ES)
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