House panel slams ‘lack of professionalism’ in credit guarantee fund for small businesses

NEW DELHI : The Public Accounts Committee of the Parliament has castigated the lack of professionalism of the Trust of the Guarantee Fund for Credits to Micro and Small Enterprises (CGTMSE).

In its 44th report on the operation of the CGTMSE, the Public Accounts Committee under the chairmanship of Lok Sabha member Adhir Ranjan Choudhury expressed displeasure that despite operating nationwide, the trust n It has only one office with 45 or so staff and also the Ministry of MSMEs has recruited officers from the Small Industries Development Bank of India (SIDBI) on delegation to run the trust.

The report was presented to parliament on Wednesday.

“The committee is distressed that no professionalism has been developed in the region and the institution has not been strengthened even after a long period of 21 years and a lot of money has been injected into the institutions to provide easy credit to the MSME sector,” the report states.

He recommended that the CGTMSE hire dedicated staff and remove the policy of ad-hocism in the recruitment of delegated or fixed-term staff in the organization.

“The committee also fails to understand the reasons why the trust has not been able to evolve and develop as a professional body, as is the case for institutions in the financial sector. The committee is convinced that at a time when the government invests a significant sum of money in the guarantee program to ensure the effectiveness of the trust in a wider area, allowing for proper monitoring and transparency, strengthening the human resources of the organization is a absolute necessity.”

He noted that as of March 31, 2020, four high-ranking officers, including the CEO, were drawn by delegation from SIDBI to CGMTSE.

The committee suggested that since the government is taking several steps to promote the sector and increase the financial allocation, it would not only be appropriate but also necessary to adequately strengthen the CGTMSE to enable it to achieve the objectives set by the government.

“The trust’s human resource management should ensure, among other things, that there is no opportunity for vested interests to develop: and provide for the fixing of liabilities in the event of serious breaches,” the report states.

The committee asked the ministry to report on the actions taken in terms of human resources management within three months.

He further stated that with only one office in the country, the trust is unable to reach 6.3 million SMEs and expand member lending institutions listed under the trust as partners of loan to maximize coverage under the program.

“In order to effectively fulfill the mandated tasks, the committee recommends that the number of offices of the CGTMSE be increased appropriately.”

The Credit Guarantee Fund for Micro and Small Enterprises (CGTMSE) is a body established jointly by the Union Ministry of Micro, Small and Medium Enterprises (MSMEs) and the Small Industries Development Bank of India (SIDBI) to catalyze the flow of institutional credit to micro and small enterprises. companies.

The Credit Guarantee Scheme (CGS) for small and micro enterprises was launched to strengthen the credit granting system and facilitate the flow of credit to the MSE sector, create access to finance for the unserved , underserved and disadvantaged, by making finance available from conventional lenders. new generation entrepreneurs.

According to the trust’s website, over the past 20 years, CGTMSE has been instrumental in providing collateral coverage for guarantees and third-party unsecured credit facilities extended by eligible MLIs to MSEs. .

In FY21, a total number of guarantees of 8.36 lakh were approved for an amount of 36,954 crore, according to CGTMSE. He also managed a special program of MoHUA i.e. “PM SVANidhi” where a total of 14.38 lakh guarantees were approved amounting to Rs.1,435 crore.

As a result, full approval during the year was 38,389 crore. Moreover, cumulatively, as of March 31, 2021, a total of over 51.4 lakh accounts have received collateral approval for Rs.2.59 lakh crore, according to information on its website.

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