Addressable MSME base for banks expanding with growing Udyam registrations: Crisil
Contents News/Article Date: 3rd October 2022
Relating to which Act: Micro, Small and Medium Enterprises Development Act, 2006, MSME Development Act, 2006; MSME Udyam Registration under MSME Act
Type: CRISIL report
Pertains to: All Micro, Small & Medium Enterprises
Relevance of this news: Karma Management Global Consulting Solutions Private Limited is a notable member of MSME for over a decade. Karma Management does a lot of compliance and legal work for a number of small and medium MSME Enterprises in relation to payroll, staffing, labour laws, HR services, training, and so on.
Karma Global also sends a lot of suggestions and advisories to officials on labour-related issues and the need for simplifying the outlook of some of these provisions affecting the business health of small enterprises.
You may all know that Form of Legal Organization under MSME Act – There is no particular form of legal organization to be adopted to be eligible under the MSMED Act. Benefits under MSME Act will be available so long as the enterprise satisfies the investment and specified turnover limits and has filed Udyam Registration.
According to the Notification dated 29-9-2006, the following type of enterprise may register as MSME:
- Proprietorship
- Hindu undivided family
- Association of persons
- Co-operative society
- Partnership firm
- Company
- Undertaking
- Any other legal entity
Most of the MSMEs are totally dependent on bank borrowings and these findings have been brought about by CRISIL – A reputed credit rating agency who have revealed that the MSME base for banks has been increasing with growing UDYAM registrations which is a very good sign of enterprises coming back to life after the 2-year covid downturn that brought about the devastation in the living conditions of people and industries per se.
Subject: Addressable MSME base for banks expanding with growing Udyam registrations: Crisil
For greater details, appended below is the complete news item
Addressable MSME base for banks expanding with growing Udyam registrations: Crisil
Credit and finance for MSMEs:
As of October 3, 2022, 1.12 crore, MSMEs had registered on the Udyam portal, of which 1.06 crore were micro units, 4.13 lakh were small enterprises, and 38,885 were medium units.
The asset quality in the MSME segment, which saw the maximum restructuring, remains a key monitorable, with gross NPAs expected to rise in the current financial year, Crisil said.
Credit and finance for MSMEs: With the increasing formalization of the MSME sector and the number of MSMEs registered under the Udyam portal, the addressable base for banks is expanding, especially for priority sector loans, said credit rating agency Crisil Ratings on Monday. “The segment is also riding on the benefits of government reforms,” the agency said in its H1 FY23 round-up of India Inc’s credit ratings.
As of October 3, 2022, 1.12 crore, MSMEs had registered on the Udyam portal, of which 1.06 crore were micro units, 4.13 lakh were small enterprises, and 38,885 were medium units, according to the data from the Udyam portal that was launched in July 2020 to replace the erstwhile Udyog Aadhaar Memorandum (UAM) portal for MSME registration.
The government’s intent to launch Udyam has been to ease the process of formalization of MSMEs for better decision-making with respect to relevant schemes and initiatives to be undertaken to help the sector grow.
“The multiplicity of issues which we face in the MSME sector, it is probably a multi-pronged approach which is more suitable. The first obvious step here, which is also kind of the biggest ambition of the MSME Ministry is to identify micro, small, and medium entrepreneurs and to bring them under a formal structure. Formalization is our primary target and the biggest ambition,” MSME Ministry Secretary B.B. Swain had at FE MSME Business Conclave organized by FEASPIRE in June this year.
Crisil highlighted growth in the Udyam database as one of the points noting improvement in key performance metrics for banks. The banking sector is at an inflection point, slowly putting past vulnerabilities behind and making a comeback after a phase of a sharp increase in gross NPAs, fall in profits, and subdued credit growth, the agency said.