The Biz Reporter
Srinagar:
The Kashmir Chamber of Commerce and Industry (KCC&I) today participated in the 70th meeting of the Empowered Committee on Micro, Small and Medium Enterprises (MSMEs) for the Union Territories of Jammu & Kashmir and Ladakh, held at Jammu, where the Chamber strongly advocated for enhanced MSME financing, greater awareness regarding RBI-backed digital financing platforms, easier access to collateral-free credit, and a more practical approach towards stressed business accounts in the Union Territory.
The Chamber was represented in the meeting by its JVP, Mr. Farooq Amin, who raised several issues concerning MSMEs, industrial units, startups, tourism-linked enterprises, handicrafts, and small businesses operating across Jammu and Kashmir.
During the meeting, KCC&I highlighted the acute lack of awareness regarding the Trade Receivables Discounting System (TReDS), an RBI-regulated digital platform designed to help MSMEs unlock working capital through discounting of trade receivables and invoices with banks and NBFCs in a transparent, paperless and collateral-free manner.
The Chamber stated that TReDS has the potential to significantly improve liquidity for MSMEs by enabling suppliers to receive timely payments against invoices raised on corporates, Public Sector Undertakings (PSUs), and government departments. However, KCC&I observed that despite the benefits of the platform, awareness among MSMEs in Jammu and Kashmir remains extremely low.
Mr. Farooq Amin stated that if proper awareness and outreach regarding TReDS had been created earlier, it would have substantially helped businesses in addressing the severe liquidity constraints currently being faced by the MSME sector in Jammu and Kashmir.
The Chamber urged banks, financial institutions, TReDS operators, and government departments to undertake aggressive awareness campaigns and stakeholder outreach programmes across industrial estates and business clusters in the Union Territory.
Regional Director, RBI J&K, Mr. Chandrashekhar Azad, while responding to the concerns raised by KCC&I, emphasized that Udyam Registration is mandatory for MSMEs to avail the benefits of several government and RBI-supported schemes. He directed banks to intensify awareness regarding Udyam Registration and instructed that KCC&I should be actively involved in the awareness campaign to ensure wider outreach among entrepreneurs and business stakeholders.
The RBI Regional Director also instructed banks and TReDS-related institutions to increase publicity and awareness regarding the platform among MSMEs and industrial units across Jammu and Kashmir.
KCC&I further raised serious concerns regarding the low disbursement of loans under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme in Jammu and Kashmir. The Chamber stated that despite the scheme being designed to facilitate collateral-free loans, entrepreneurs and business units in the region continue to face demands for collateral security, personal guarantees, and cumbersome banking procedures.
The Chamber observed that the average loan disbursement figures under MSME schemes in Jammu and Kashmir remain considerably lower compared to several other regions of the country and stressed the need for corrective intervention.
KCC&I emphasized that the prevailing unemployment situation in Jammu and Kashmir necessitates easier access to low-interest credit and simplified financing procedures for startups, youth entrepreneurs, and existing business units. The Chamber urged banks to facilitate financial assistance under flexible and entrepreneur-friendly norms without excessive insistence on collateral security and guarantees.
The Chamber further stressed that the objective of MSME financing should be to encourage entrepreneurship and economic activity rather than create procedural hurdles that discourage genuine business initiatives.
KCC&I also raised the issue of rigid banking practices in relation to MSME financing, particularly the excessive dependence on CIBIL scores and technical classifications without adequately assessing the extraordinary circumstances faced by businesses in Jammu and Kashmir.
The Chamber pointed out that several sectors, particularly tourism and allied industries, have suffered repeated economic setbacks due to unforeseen developments including the recent impact on tourism following the Pahalgam incident in April last year and other disruptions affecting business activity and repayment capacity.
KCC&I urged banks and financial institutions to adopt a pragmatic and humanitarian approach while dealing with stressed MSME accounts and avoid coercive recovery practices, public “name and shame” measures, and harsh classifications that further damage already distressed enterprises.
The Chamber strongly advocated that entrepreneurs facing genuine financial distress should be provided a dignified and consultative resolution mechanism. KCC&I demanded that the Chamber be made part of consultative committees dealing with stressed MSME accounts and NPAs so that banks, entrepreneurs, and trade representatives can collectively arrive at workable solutions.
The RBI Regional Director, during the meeting, advised banks to engage more actively with KCC&I and seek the Chamber’s assistance in resolving issues relating to collateral requirements, MSME distress, and financing bottlenecks.
KCC&I also highlighted the importance of the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, which provides 100 per cent government-guaranteed, collateral-free additional credit support to MSMEs, and stressed the need for wider awareness and easier access to the scheme for businesses affected by economic distress and liquidity constraints in Jammu and Kashmir.
KCC&I also highlighted the high rejection rates being witnessed under various self-employment and livelihood generation schemes including PM SVANidhi, PM Mudra Yojana, and PM Vishwakarma Yojana.
The Chamber stated that many deserving applicants are unable to avail benefits under these schemes due to procedural delays, documentation hurdles, and lack of awareness at the implementation level. KCC&I sought a comprehensive review of rejection patterns under these schemes to ensure that eligible beneficiaries are not deprived of institutional support.
KCC&I urged banks and financial institutions to undertake regular financing reviews of industrial clusters and ensure equitable credit flow to sectors that contribute significantly to employment generation and exports from Jammu and Kashmir.
KCC&I appealed to all MSMEs, startups, entrepreneurs, traders, artisans, and industrial units in Jammu and Kashmir to complete their Udyam Registration at the earliest so that they are able to avail benefits under various government schemes, RBI initiatives, institutional financing programmes, and credit support mechanisms.
