MICRO UNITS DEVELOPMENT & REFINANCE AGENCY LTD. (MUDRA)

Micro Units Development & Refinance Agency Ltd. (MUDRA) was set up on April 08, 2015 as a wholly owned subsidiary of SIDBI for “funding the unfunded” micro enterprises in the country. MUDRA has been supporting Banks, Micro-finance Institutions (MFIs), NBFCs and other lending institutions through refinance assistance for lending to micro/ small business entities engaged in manufacturing, trading, service sector activities, activities allied to agriculture and other eligible income- generating activities.

MUDRA also manages the PMMY portal where the lending institutions upload their operational data relating to implementation of the Pradhan Mantri Mudra Yojana (PMMY). The progress of implementation of PMMY is reviewed periodically by MUDRA Ltd. and Department of Financial Services, Ministry of Finance, Govt. of India at all India level and State Level Bankers Committees at the state level.

MUDRA, currently with an authorised capital of ` 5,000 crore and a paid up capital of ` 1,675.93 crore, works closely with Banks, MFIs and other lending institutions at the state/ regional level to provide micro finance support to the growing micro enterprise sector in the country.

MUDRA Impact:

• MUDRA’s refinance support has facilitated availability of cheaper funds to lending institutions for expanding their lending up to INR 10 lakh for income generating activities eligible under PMMY. This has further helped in reducing cost to the ultimate beneficiaries.

• Close monitoring of lending at the ground level through PMMY has resulted in cumulative lending of `23.48 lakh crore to 41.16 crore borrower-accounts (as on 31.03.2023). Out of these, 69% borrowers were women, 21% were new loan accounts and 51% were SC/ST/OBC category.

• MUDRA has disbursed refinance of INR 65,564 crore till March 31, 2023 to various MFIs, NBFCs, Scheduled Commercial Banks including Regional Rural Banks and Small Finance Banks.

For more details kindly visit http://www.mudra.org.in/

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) set up by SIDBI and Ministry of MSME, GoI in 2000, operates the Credit Guarantee Scheme (CGS) for MSEs in respect of credit facilities extended by its Member Lending Institutions, which are not backed / partially backed by collateral security and / or third-party guarantees. The limit of guarantee has been raised from `2 crore to `5 crore wef April 1, 2023

Cumulative guarantee of 70.25 lakh aggregating `4.19 lakh crore has been approved till March 31, 2023.  The amount of Guarantees approved during FY 2023 is `1,04,781 crore recording a significant growth of 87%. The share of women entrepreneurs and SC/ST entrepreneurs in the total approved guarantee during last FY is 31% and 8% respectively. The units supported under guarantee scheme of CGTMSE have generated employment to the tune of 181 lakh.  

Apart from overwhelming growth in last FY, we rose to the occasion and managed 2 special schemes i.e. PMSVANidhi and CGSSD to meet COVID Challenges. Both the CGSSD and PM SVANidhi schemes are poised to bring back life to two of the most crucial segments of entrepreneurial ventures.

CGTMSE has leveraged technology to improve operational efficiencies and introduced major policy changes in the credit guarantee products such as Wholesale trade and Educational Institutions were included as eligible activities for guarantee coverage, increase in the extent of guarantee coverage to 75% for loans above ` 50 lakh, charging guarantee fee on outstanding amount instead of sanction amount, inclusion of retail trade as eligible activity, allowing partial collateral security, inclusion of NBFCs including Fin-Tech NBFCs, SFBs and Scheduled Urban Co-operative Banks as eligible MLI of CGTMSE.

Important developments during FY 2022:

1. Increase in ceiling of guarantee coverage from `2 crore to `5 crore with effect from April 01, 2023.

2. New guarantee fee structure has been introduced with significant reduction in the fee from peak rate of 2% pa to 0.37% pa with effect from April 01, 2023

3. For the first time, to recognize and reward, a concept of discount has been introduced for better managed MLIs.

4. An innovative Scheme for Units located in Aspirational Districts has been launched under which guarantee fee will be charged less by 10% from standard rate and will have an increased extent of guarantee coverage by 10% than the normal coverage. This is in line with New India Vision of ‘Transformation of Aspirational Districts’.

5. Concession / relaxation in fee by10% and increased guarantee coverage by 10 % to MSEs to be promoted by Agniveers

6. UTs of Jammu & Kashmir and Ladakh have been brough at par with North Eastern States in terms of liberal terms of Guarantee. This is in line with the national objective of providing boost to economic activities in the areas which have been traditionally remained underserved.

7. Special benefits to ZED Certified MSEs has been introduced with lower guarantee fee by10% and increased guarantee coverage by 10 %.

8. With a view to support Women Entrepreneurs as well as SC/ST Entrepreneurs and People with Disability, concession in fee by 10% and coverage of 85% has been introduced in respect of loans given to this segment of entrepreneurs.

9. Microfinance Institutions (MFIs) have been made eligible to be registered as Member lending institution under the Credit Guarantee Schemes in order to further facilitate enhanced credit to economically disadvantaged groups and empowerment of  poor, thus supporting balanced regional development and Rural development.

10. Trading activity (MSE Retail Trade and Wholesale Trade) has been aligned with other activities in respect of the extent of coverage, ceiling of credit guarantee coverage and guarantee fee.

11. For ease of claim settlement, the limit for waiver of legal action has been raised from `1 lakh to `5lakh during the year, which has been further increased to `10 lakh (effective April 1, 2023) while invoking claim by Member Lending Institutions.

12. CGTMSE has approached various State Governments for collaborating with an aim to make Guarantee mechanism an attractive tool to facilitate credit dispensation in the respective States. MoU has been signed with Four State Governments viz State Government of Tamil Nadu, Assam, Manipur, Meghalaya and West Bengal. Manipur Credit Guarantee Scheme has been launched.

13. Introduced New Scheme “Payment of Annual Guarantee Fee (AGF) in Credit Guarantee Scheme of CGTMSE by Government of Rajasthan under BRUPY Scheme, 2022” for SC/ST entrepreneur native to State of Rajasthan.

Credit Guarantee Fund Trust for MSEs (CGTMSE)

• Credit Guarantee Scheme for MSEs in respect of credit facilities up to ₹ 5 crore made applicable from April 01, 2023

• Achievements during FY 2023:

• Guarantees approved stood at ₹ 1,04,781 Crore

• Number of guarantees approved– 11,65,786

• CGTMSE has approved 70.25 lakh guarantees covering loans amounting to over ₹4 lakh crore and settled 4.61 lakh claims amounting ₹10,325 crore on a cumulative basis

• Units supported by CGTMSE have generated employment to the tune of 181 lakh

• Units supported by CGTMSE have contributed ₹ 24,441 crore towards exports.

RECEIVABLES EXCHANGE OF INDIA LTD. (RXIL)

Small Industries Development Bank of India (SIDBI), and National Stock Exchange of India Ltd. (NSE), along with State Bank of India, ICICI Bank and Yes Bank launched India’s first TReDS platform under Receivables Exchange of India Limited (RXIL) on February 25,2016.

Trade Receivables Discounting System (TReDS) is an online platform for financing of receivables of Micro, Small & Medium Enterprises through a transparent auction-based mechanism.

IMPACT OF RXIL:

• RXIL offers a win-win proposition to all stakeholders– MSMEs, corporate buyers (including PSUs and Government departments) and financiers. Providing complete digital support with paperless transactions, RXIL TReDS platform offers a transparent bill discounting system for prompt and timely payments for MSMEs receivables.
• Deepening of digital payments and improvement of MSME sector by enabling easier market access and timely receipt of receivables inter-alia has occupied the prime focus of the Government. TReDS has been one of the steps taken for benefitting the MSMEs realize their receivables in a time-bound manner at a relatively lower financing cost.
• Since its inception, RXIL TReDS has onboarded close to 12000+ MSMEs and helped them obtain timely payments against their dues worth `32,000 crores (as on August 31, 2022). Moreover, being a completely digital platform, RXILs operations continue without any disruption. This timely and low-cost finance has helped MSMEs bring down their finance costs by about 50%. These savings have been invested in business expansion and increasing the turnover. RXIL is the only TReDS platform which have activated State Govt on TReDS platform, which help the MSME vendors of State to get financing against their receivables.
• It is RXIL’s vision to extend the TReDS benefit and to support the growth and development of 50,000 and more MSMEs across India by FY 2024.
• RXIL is committed to contribute to the Government of India’s vision of creating a vibrant MSME ecosystem in the country and actualise the vision of AtmaNirbhar Bharat (Self Reliant India)

For more details visit https://www.rxil.in/

ACUITÉ RATINGS & RESEARCH LIMITED

Acuité Ratings & Research Limited (www.acuite.in)is a technology-enabled, full-service credit rating agency registered with the Securities and Exchange Board of India (SEBI) and accredited by Reserve Bank of India (RBI). The Company received RBI Accreditation as an External Credit Assessment Institution (ECAI), for Bank Loan Ratings under BASEL-II norms in the year 2012. Since then, it has assigned more than 9100+ credit ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide section of industries. Acuité rates bonds, debentures, commercial paper, fixed deposits and various fund-based and non-fund-based bank facilities. Apart from credit ratings, Acuité’s expertise includes economic research, industry research, financial modelling, rating modelling, and development of software applications. 

SMERA Ratings Private Limited is a wholly owned subsidiary of Acuité Ratings & Research Ltd. SMERA (www.smeraonline.com) is world's first SME-focused rating agency providing credit ratings of Indian micro and small enterprises. SMERA's services are aimed at empowering the SME ecosystem by promoting transparency, building trust and facilitating lending decisions. SMERA, which morphed from an initiative of the Ministry of Finance and RBI back in 2005, has built an enviable record of conducting more than 50,000 ratings till date.

International Finance Corporation (IFC) recognized SMERA as a novel and sustainable initiative of the Government of India, to improve the credit flow to the MSME sector. In 2007, the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) awarded SIDBI with "Outstanding Development Project Award" under the SME Development Category, for setting up SMERA. This award was a recognition of the Indian initiative to enhance credit flow to credit-constrained SME sector for developing its SME sector. SMERA was also a recipient of the Technical Assistance Grant by DFID, UK under World Bank’s ‘Project on SME Financing & Development’.

ESG Risk Assessments & Insights Ltd. (ESGRisk.ai), another wholly owned subsidiary of Acuité Ratings & Research Ltd., is India’s first ESG Rating company and a pioneer in bringing ESG assessments to investors and corporates. Currently, ESG assessment reports and ratings of over 600 listed Indian companies can be accessed via “ESG 360 Degree” subscription platform of ESGrisk.ai. ESGRisk.ai’s ratings are an objective, independent and unbiased opinion on a company’s ability to mitigate emerging risks associated with Environment, Social, and Governance issues that have a material financial impact. ESG ratings foster informed decision-making while choosing ESG investments, assessing a particular company's or industry's performance, reviewing ESG business strategies and identifying the need for policy interventions.

Apart from ESG ratings of listed companies, ESGRisk.ai also provides ESG assessments of unlisted companies and ESG Gap Analysis and aims to launch its proprietary methodology of ESG indices.  ESGRisk.ai has also launched India's first ESG Leadership Awards based on a very detailed methodology. 

INDIA SME ASSET RECONSTRUCTION COMPANY LIMITED

India SME Asset Reconstruction Company Limited (ISARC) was incorporated on April 11, 2008 and commenced business operations on May 29, 2008 with the principal objective of acquiring non-performing assets (NPAs), inter-alia in the MSME sector. The aim was to ensure speedy restructuring of potentially viable units and liquidating unviable units so that productive use of the assets is maximised. ISARC’s shareholder base consists of SIDBI, SIDBI Venture Capital Limited, Punjab National Bank and Bank of Baroda as Sponsors. Other shareholders include public sector banks and financial institutions.

Acquisition:

During the FY2019-20, majority of shareholders had decided to sell their shareholding in ISARC and appointed a Merchant Banker to run the divestment process. As the process of divestment was in progress, the Merchant Banker had advised to maintain status quo on acquisition of new account, to avoid any disruption in due diligence process. Since divestment did not materialise / got delayed, the Board of the Company decided in Nov.2020 to continue the operations with fresh acquisition of NPAs out of funds available with the Company. However, no bid for acquisition was submitted during the year, as most of the lenders who came out with sale of NPAs insisted 100% cash payment. During FY2022, SIDBI again, on behalf of itself and other shareholders, re-initiated the process of disinvestment and decided to sell its entire shareholding in the Company to M/s Dhansamridhi Finance Pvt. Ltd. for which other shareholders (including SVCL) have also agreed to divest (total selling shares of 86.70%). Accordingly, the Share Purchase Agreement has been executed by and amongst the selling shareholders (holding 86.70% of the equity share capital) and the bidder NBFC on April 06, 2022. The Company would shortly approach RBI seeking approval for the divestment/ change in sponsors / directors.

Performance:

ISARC (as per provisional unaudited financials) achieved recovery of Rs.56.40 crore in FY 2021-22 as against Rs.8.28 Crore in the previous year. Security Receipt (SRs) worth Rs.22.71 crore were redeemed during the year (Rs.1.46 crore in the previous year). Asset Under Management (AUM) for ISARC as on March 31, 2022 stood at Rs.376.05 crore.

For more information, visit http://www.isarc.in

India SME Technology Services Limited (ISTSL) was set up in November 2005 by SIDBI along with Indian Bank, Oriental Bank of Commerce, Indian Overseas Bank and State Bank of India with the primary objective to strengthen and accelerate the process of technological modernization in the MSME sector.

Through key partnerships with national and international organisations engaged in similar activities, ISTSL offers expert technology advisory and consultancy services to MSMEs so as to enable them to make the best of the latest technological developments and remain relevant in the fast changing market place. It also plays a crucial role in providing a platform for MSMEs to tap opportunities at the domestic and global level for acquisition of modern technologies.

Key technical development services offered by ISTSL include sharing of information on technology options, match-making, finance syndication and business collaborations, organising seminars/meets and providing market support. Another key contribution of ISTSL is its strong focus on promotion of energy efficient, and environment friendly technologies in the MSME sector, with considerable efforts being made to facilitate reduction in Green House Gases in the MSME sector.

ISTSL is also providing project management consultancy services for implementation of renewable energy (especially solar rooftop PV system projects).

ISTSL is one among the very few agencies selected for conduction of Zero Defect – Zero Effect (ZED) Scheme Awareness Workshops among MSMEs. ISTSL is also empanelled as a technical inspection agency with “The National Small Industries Corporation Limited” under single point registration scheme.

For more information, visit https://www.istsl.in