Union Cabinet to soon decide on Rs 100 CR credit guarantee scheme for MSMEs: FM Nirmala Sitharaman
Bengaluru, Nov 9: Union Finance Minister Nirmala Sitharaman on Saturday said that the Rs 100 crore credit guarantee scheme for MSMEs which was announced in the budget this year will soon be placed before the Union Cabinet for approval.
Highlighting the five announcements made in this budget for MSMEs she said, "the introduction of a special credit guarantee corpus to help MSMEs will be very helpful during the time of distress...."
"The Rs 100 crore credit guarantee scheme will soon be placed before the cabinet. Immediately after getting approval from cabinet, the scheme that will provide guarantee through MSME ministry and banks will be implemented," the Union Finance Minister said, while attending the National MSME Cluster Outreach Programme here.
"The grievance, which has been there for a very long time, is that the MSMEs can get working capital from banks but they don't get term loans, loans for plant and machinery. Now the guarantee will be provided under the scheme," she explained.
Further stating that there is no need for a third party guarantee and collateral, Sitharaman said, "the Government gives you the guarantee power of Rs 100 crores, then public sector banks will develop a new credit assessment model."
Lauding Karnataka for its contribution in the MSME sector, she said, the state has 35 lakh MSMEs, and they provide 1.65 crore employments.
Highlighting the role of Small Industries Development Bank of India (SIDBI), the Finance Minister said, "the SIDBI understands small businesses. It can deal with MSMEs credit requirements and (provide) tailor made products for the credit requirement of MSMEs, and that is why SIDBI's presence in MSME clusters will do immense benefit for the MSMEs."
"....within a matter of two to three years, SIDBI, will be present physically in every MSME cluster. Now they are expanding little by little. SIDBI will open 25 branches in clusters this year, but gradually they will be moving towards every cluster a SIDBI," she said .
Earlier in the day, Sitharaman also chaired a meeting here to review performance of 10 Regional Rural Banks (RRBs)of the Southern Region, covering the five states of Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Telangana apart from the Union Territory of Puducherry.
During the meeting, she urged RRBs to increase credit disbursement under various Government of India flagship schemes such as MUDRA, PM Vishwakarma, with the active support of their sponsor banks.
According to an official statement, the meeting focused on business performance, upgrading digital technology services, and fostering business growth in activities allied to agriculture and micro and small industry
The Union Minister also directed RRBs to increase their share in ground level agriculture credit disbursement with special focus on allied agriculture activities like dairy, animal husbandry, fisheries etc, and to take necessary steps to realise the full potential of allied agriculture activities in the region.
"RRBs and sponsor banks were specially directed to work with respective state government departments to increase credit disbursement to fisheries sector in Kerala and dairying sector in Telangana," it stated.
Specific emphasis was placed on reinforcing credit support to MSMEs and streamlining customer onboarding processes through digital innovations.
"Sitharaman also stated that all RRBs should devise a strategy for MSME credit with customised products aligning with cluster activities and conduct special outreach programmes with convergence and awareness regarding the various Government of India schemes. She said that the RRBs should explore to leverage digital platforms of SIDBI and seek MSME refinance from it," the statement added.
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Rs 30,000 cr loss a month: Oil companies bleed as fuel prices on hold amid global energy spike
New Delhi (PTI): About Rs 700-1,000 crore loss per day. Rs 30,000 crore every month. India's state oil companies are quietly absorbing a massive financial hit to keep petrol, diesel and LPG prices unchanged even as global energy markets face a turmoil that is bigger than all previous crises combined.
While countries from Japan to United Kingdom have raised petrol and diesel prices by up to 30 per cent since the start of the West Asia conflict, fuel prices in India continue at two-year-old levels.
The war disrupted India's import of 40 per cent of crude oil (raw material for making petrol and diesel), 90 per cent cooking gas LPG and 65 per cent natural gas (used to generate electricity, make fertilizer, turned into CNG and piped to household kitchens for cooking), but state-owned oil companies have maintained uninterrupted fuel supplies with no rationing or shortage at any point in the last 10 weeks.
But this has come at a cost - Rs 30,000 crore under-recovery or loss every month for the three oil marketing companies - Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), two sources with direct knowledge of the matter said.
The under-recoveries - the gap between input costs and realised retail prices - rose sharply in March/April before tapering a bit. Daily under-recoveries during April were estimated at about Rs 18 per litre on petrol and Rs 25 per litre on diesel, translating into average losses of Rs 700-1,000 crore a day for OMCs, they said.
At a news briefing on developments in West Asia, Sujata Sharma, Joint Secretary in the Ministry of Petroleum and Natural Gas, said prices in the international markets, on which India relies to meet 88 per cent of its oil needs, have been volatile and supplies impacted.
Crude oil prices which were around USD 70 per barrel two months ago, are now at USD 120, she said. "It has been government's endeavour to keep prices stable so far and that there is no price increase for consumers," she said. "This has hit finances of OMCs... monthly under-recoveries are of the order of Rs 30,000 crore."
She, however, refused to say if retail petrol and diesel prices will continue to hold.
"As I said, the endeavour so far has been to see that there is no price increase," she said.
The three oil marketing companies (OMCs) have worked overtime to keep the supply lines running even when demand spiked due to panic buying.
The government intervention included excise duty reductions and absorption of part of the fuel cost burden. The special additional excise duty on petrol was cut to Rs 3 per litre from Rs 13, while excise duty on diesel was reduced to zero from Rs 10 per litre.
The under-recoveries would have swelled to nearly Rs 62,500 crore had the government not cut excise duty on petrol and diesel by Rs 10 per litre each.
The government, Sharma said, has taken a hit of Rs 14,000 crore a month in cutting the excise duty.
The Centre's effective absorption at peak crude prices was estimated at around Rs 24 per litre for petrol and Rs 30 per litre for diesel.
The February 28 strikes by the United States and Israel on Iran triggered a sharp escalation in West Asia tensions. Energy prices surged as the conflict widened and shipping risks intensified in the Strait of Hormuz - the shipping lane through which India and other countries imported crude oil, LPG and natural gas from Gulf countries. Tanker movement was disrupted.
The companies also faced additional costs from emergency crude sourcing, higher freight charges due to vessel diversions, elevated marine insurance premiums and refinery optimisation expenses. Despite these pressures, fuel and LPG supplies remained uninterrupted across the country.
The surge in crude prices and the decision to shield consumers from higher retail prices placed significant strain on OMC balance sheets and refining margins, sources said.
They added that the measures reflected a policy decision to prioritise consumer stability and economic continuity during a global energy shock.
Sources warned that a prolonged period of elevated crude prices could lead to higher working capital borrowings and force some recalibration of capital expenditure plans. However, investments linked to refining expansion, energy security infrastructure, ethanol blending, biofuels and transition fuels would continue with government backing, they said.
India's approach contrasted with measures adopted by several other economies, where fuel prices rose sharply after the conflict-driven energy shock.
Petrol prices increased by about 34 per cent in Spain, 30 per cent in Japan, Italy and Israel, 27 per cent in Germany and 22 per cent in the United Kingdom, according to estimates. Several countries also introduced rationing, conservation advisories, emergency relief packages or fuel caps.
In India, petrol prices remained Rs 94.77 per litre and diesel at Rs 87.67, with no rationing, mobility restrictions or supply disruptions, they added.
Sharma said the revenues that OMCs earn are used to buy crude oil, build infrastructure to process it into fuel and create channels that will take the fuel to consumers.
Their capex spending is all dependent on the revenues they earn, she added.
