PPP mode can help mitigate credit risk factor for MSMEs through insurance mechanism: DC MSME

New Delhi, Aug 3 (KNN) By way of public-private-partnership between government and industry, ways and means can be devised to mitigate credit risk factor for Micro Small and Medium Enterprises (MSMEs) through insurance mechanism, said Ram Mohan Mishra, Additional Secretary and Development Commissioner, Ministry of MSME.

Mishra made the aforesaid observations at a seminar on ‘Debtors and Industry Protection Through Insurance-Need of MSME Sector’ organized by PHD Chamber of Commerce and Industry (PHDCCI) here.

He also stressed that premium factor that go into insurance would have to be examined critically so that it leads to win-win situation for both industry particularly MSME segment and its insurers with multiple products on the plate.

Mishra also called upon the PHDCCI to come out with a comprehensive paper as to how insurance can be provided to MSMEs so that through it policy measures can be evolved to suggest measures for risk mitigation for MSMEs as a whole with a detailed institutional mechanism in place.

According to Mishra, MSMEs do require multiple insurance products with moderate premium accompanying the products as the insurance for this sector has to be affordable, given the overall paying capacity of MSMEs that usually face credit crunch as also encounter receivables from their debtors.

Speaking on the occasion, Vice President, PHDCCI, Sanjay Aggarwal in his welcome remarks said that MSMEs face a wide spectrum of risks, many of which are commercially uninsurable. Therefore, some arrangements on the policy fronts need to be put in place so that MSMEs are encouraged towards insurance and on this front, suitable policy mechanism can be devised as suggested on public-private-partnership front.