MSMEs’ `3-lakh cr credit scheme off to a slow start

Icra downgraded the rating on certain bonds of Yes Bank, days after RBI restrained the lender from making repayments to bondholders on account of capital being below the mandated levels. The rating on six Basel-II compliant upper tier II bonds totalling up to Rs 32,611 crore have been downgraded to 'D'. The RBI had refused to accede to a bank's request to pay the interest on the bonds issued in 2012 due on June 29 .

New Delhi, June 23: Amid mounting Covid-19 cases in the country, regulator Irdai on Tuesday allowed the health and general insurers to offer short-term health insurance policies that will give coverage against the coronavirus infection.

With an objective of making available insurance protection to various sections of people in the prevailing Covid-19 pandemic, it is considered that short-term health insurance policies providing coverages specific to

Covid-19 disease is the need of the hour, it said in a circular.

Accordingly, all insurers (life, general and health) are allowed to offer Covid19-specific short-term health insurance policies subject to the guidelines, said the Insurance Regulatory and Development Authority of India (Irdai).

"Short-term policies may be issued for a minimum term of three months to a maximum term of eleven months.

"In between three months and eleven months, the policy term shall be in multiples of completed months," it said while issuing the guidelines.

After making ‘country of origin’ for products mandatory on the government e-commerce platform, the Department for Promotion of Industry and Internal Trade (DPIIT) has called a meeting of e-commerce companies on Wednesday. DPIIT will be discussing the proposal to make the ‘country of origin’ clause mandatory for them as well.

Representatives of ecommerce companies, including Amazon, Flipkart, Snapdeal, Nykaa and Pepperfry will attend the meeting, which will be held through video conferencing, sources said.

The Government eMarketplace (GeM)— which is a platform for procurement of goods and services by the government ministries and departments, public sector undertakings and other apex autonomous bodies of the central government—has made it mandatory for the products to mention their country of origin. This decision has to be viewed in the backdrop of increasing tension between India and China and public outcry for boycott of Chinese products.

Applauding the move, Confederation of Indian

Traders (Cait), body representing small traders, on Tuesday raised the demand with commerce minister Piyush Goyal to make it mandatory for all e-commerce portals to invariably mention “country of origin” against each product sold by them.

Cait had, in fact, raised this demand on June 15 to the commerce minister. Cait finds that mostly all e-commerce companies are selling Chinese goods in large percentages on their portals and in the absence of country of origin provision, the customers are unaware about the origin of the country, which certainly influences the choice of the consumers.

Sources in the e-commerce industry said that the government has informed them that there will be a discussion on the topic.

With a large segment of consumers calling for boycott of Chinese products, such a move can hamper the sales of e-commerce companies, which is limping back to normalcy. the

Even after a month of its launch, the government's ambitious Rs 3-lakh crore credit guarantee scheme for micro, small and medium enterprises (MSMEs) is learnt to be running at a snail's pace due to muted demand, though the government claims MSME interventions have been gaining rapid traction.

Actual disbursals under the scheme are 11.6 per cent of the targeted amount, or roughly Rs 35,000 crore till June 20. This is less than half of the loans worth Rs 79,000 crore sanctioned, by both public and private sector lenders, till Saturday.

As part the Aatmanirbhar Bharat package, the government had announced Rs 3 lakh crore as additional credit to MSMEs and small businesses, to be disbursed in six months, starting from May 23. Enterprises are eligible of to receive up to 20 per cent of their existing borrowing as additional loans at pre-set interest rates under the Guaranteed Emergency Credit Line. "The interventions by government for MSMEs have been gaining rapid traction. The top lenders under the scheme are SBI, HDFC Bank, Bank of Baroda, PNB & Canara Bank. This has helped 19 lakh MSMEs and other businesses restart their businesses post the lockdown," a finance ministry statement said on Tuesday.

However, a senior banker said, though government banks are under pressure to disburse loans to MSMEs expeditiously, the requirement for working capital amongst MSMEs is very low at the moment. This leads to reluctance on both sides, to lend and to borrow. Therefore, the disbursement is going on at a slow pace.

After unlock 1.0 from June 8, it has been observed that only 30-35 per cent MSMEs have resumed operations, that too at partial capacity, due to Covid-related restrictions. "In such situations, the demand gets muted due to low output in manufacturing units and less numbers of sell orders in the company. So, many of these MSMEs will not dare to apply for loans,” the banker said.

Absence of workforce is also creating problems for MSMEs to get back to normal activity. Market demand for non-essential items are also muted. All this would hamper the progress of the scheme.