FISME Seeks Review Of SMA Classification Norms Ahead Of Budget 2025-26
Date
12/31/2024 4:42:56 AM
(MENAFN- KNN India)
New Delhi, Dec 31 (KNN) The Federation of Indian Micro and Small & Medium Enterprises (FISME) has submitted comprehensive recommendations to the finance ministry, calling for significant reforms in MSME credit access ahead of the upcoming budget.
In its representation, the organisation advocates for reduced collateral requirements for asset-heavy and high-turnover MSMEs, arguing that such measures would enable businesses to reinvest in growth while fostering financial discipline within the sector.
The federation has highlighted concerns regarding the current Special Mention Account (SMA) framework, which categorises stressed MSMEs.
According to FISME, the existing automated system lacks flexibility in considering qualitative factors behind payment delays, often resulting in severe consequences for flagged accounts.
The organisation suggests that support funds for SMA MSMEs should be allocated based on actual requirements rather than adhering to a fixed 10 per cent threshold.
In a significant policy recommendation, FISME has called for the elimination of Bank Loan Rating (BLR) requirements for assessing MSME creditworthiness.
This proposal gains particular relevance following the government's FY25 budget announcement directing public sector banks to develop their credit assessment models.
The federation notes that the absence of explicit Reserve Bank of India guidelines on this matter has allowed the continuation of existing practices.
The organisation has also raised concerns about trade protectionism, warning against the imposition of duties on essential raw materials such as steel, copper, and aluminium.
FISME argues that such measures could significantly impact MSME production costs and global competitiveness.
Additionally, the federation emphasises the critical need for enhanced export financing support, noting that MSMEs contribute approximately 50 per cent of India's merchandise exports while facing considerable international market challenges.
(KNN Bureau)
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