(MENAFN- KNN India)
New Delhi, Aug 17 (KNN)
In a move to strengthen the Pradhan Mantri Mudra Yojana (PMMY), the government think tank NITI Aayog has recommended establishing guidelines for assessing creditworthiness and conducting background verifications for loan applicants.
This proposal comes as part of a comprehensive report titled "Impact Assessment of PMMY," recently published on the Aayog's website.
The PMMY, launched in 2015, has been a cornerstone in supporting India's vast Micro, Small, and Medium Enterprises (MSME) sector.
To date, the scheme has provided credit support of Rs 18.39 lakh crore to 34.93 crore accounts, playing a crucial role in fostering entrepreneurship and driving socio-economic development.
Key recommendations from the report include implementing E-KYC authentication for loan underwriting to enhance assessment checks.
The Aayog also suggests developing a set of guidelines for creditworthiness assessment and background verification to provide a security net for banks, given the collateral-free nature of these loans.
Furthermore, the report proposes establishing a reward mechanism for banks based on their scale of operation and performance.
To streamline data collection, the creation of a portal for real-time upload of beneficiary data has been recommended.
These suggestions aim to address the challenges faced by banks in verifying small entrepreneurs with limited documentation, while also ensuring the sustainability and success of the scheme.
The report highlights the significant growth in credit disbursements to MSMEs across all segments, which have doubled compared to pre-pandemic levels.
However, it also notes a concerning trend in the rise of Non-Performing Asset (NPA) accounts, growing at a Compound Annual Growth Rate (CAGR) of 22.51 per cent since FY 2017.
The MSME sector's importance to the Indian economy cannot be overstated. It contributes 33 per cent of the country's total manufacturing gross value output, accounts for over 40 per cent of exports, and adds more than 28 per cent to India's GDP. Moreover, it provides employment to approximately 11.10 crore people.
As the PMMY continues to evolve, these proposed guidelines could play a crucial role in balancing the need for accessible credit with responsible lending practices, ultimately strengthening the backbone of India's entrepreneurial ecosystem.
The implementation of these recommendations would mark a significant step towards enhancing the efficacy and sustainability of this pivotal government scheme.
(KNN Bureau)
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