A parliamentary committee recently pitched for providing credit cards to MSME entrepreneurs on the lines of Kisan credit cards. It points out that at present out of 6.34 crore MSMEs, less than 40% borrow from the formal financial system, and the new Vyapar credit card will help MSMEs to get working capital, ensure trade financing for their revenues, provide capital loans at affordable rates and necessary credit guarantees.

Other important suggestions include creation of a mechanism to provide payment scores on the lines of credit scores. The committee also called for ramping up of SIDBI to ensure access to regular credit to small businesses. It has been viewed that such a platform will help MSMEs to get loans at affordable costs, adding that the Vyapar credit card will be automatically allotted to an entrepreneur who will sign up for the Udyam portal.

Credit is the lifeblood of small business, but unfortunately the formal financial system in India currently caters to the credit needs of only a small portion of MSMEs. The overall credit gap in the MSME sector is estimated to be Rs. 20-25 lakh crore. In the background of this, the suggested measures by the parliamentary committee are welcome. Also, currently there is lack of reliable data about enterprises operating in this sector and an integrated digital ecosystem will definitely boost our MSMEs.