Parliamentary panel for providing credit card to MSME entrepreneurs

The Parliamentary standing committee on finance has pitched for providing a credit card to MSME entrepreneurs on the lines of Kisan credit cards, putting in place a mechanism for payment scores and a significant ramp up of SIDBI to ensure access to regular credit to small businesses.

Former minister of state for finance and chairman of the committee Jayant Sinha said such a platform will make it possible to provide MSME an affordable line of credit with products like the MSME Vyapar credit card.

The card, on the lines of Kisan credit card, will help the small businesses with working capital, ensure trade financing for their revenues, provide capital loans at affordable rates, and necessary credit guarantees.

"The idea is that when you sign up for the Udyam portal, you automatically get a credit card which is the Vyapar credit card. Every institution can decide how big a line of credit they want to give and with that they establish your payment history," Sinha told ET.

He said this will not only bring MSMEs in a formal financing system but will cater to their immediate financing needs.

The panel, in its report, has noted that out of 6.34 crore MSMEs, less than 40% borrowed from the formal financial system.

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The overall credit gap in the MSME sector is estimated to be Rs. 20-25 lakh crore.

Sinha said a reason why banks were reluctant in lending to the MSME sector was due to the lack of reliable data about enterprises operating in this sector and hence there was a need to create an integrated digital ecosystem.

The panel has also batted for creating a mechanism to provide payment scores on the lines of credit scores.

The Open Magazine of India by Artmotion Network (

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