NT NETWORK
Panaji
Although the Reserve Bank of India (RBI) has included retail and wholesale trade as part of the micro, small and medium enterprises (MSME) sector, it could be a while before small shopkeepers in the state become a part of the larger financial system.
Many store owners in Panaji market said they are likely to raise money from family and unofficial sources to run their businesses. Information gathered after speaking to local retailers and wholesalers reveals poor awareness of the news classifying retail trade under MSMEs.
Two years of COVID-19 pandemic has affected the state’s retailers badly with owners of small businesses selling garments, shoes, household items as well as larger departmental stores complaining of meagre income to pay salaries and rent.
On Wednesday, speaking to this daily, Manoj Caculo, immediate past president of Goa Chamber of Commerce and Industry (GCCI) and the owner of Caculo Mall, said the government decision to extend the ambit of the MSME industry to retail trade is welcome.
“Once retailers are treated on par with MSMEs, they will face fewer loan formalities. The bank formality of loans to MSMEs is very much organised. Owners of retail establishments will benefit from structured loan process as well as government schemes for uplifting of MSME units,” he said.
Caculo, however, added that the success of the government initiative will largely depend on whether it actually reaches the beneficiaries (retailers). Most small shopkeepers need to be educated on bank finance. There has to be a drive to teach the traders the best way to approach banks, he said.
“The retail sector is largely unorganised. Small shop owners lack collateral to raise funds from banks. Their typical financial need is of Rs 10 lakh-Rs 20 lakh loan but
with banks asking numerous questions and treating them like any other borrowers, they are discouraged and also end up paying high interest rate. Due to the lack of institutional finance for expansion or growth, retailers remain as small businesses,” explained Caculo.
Miramar-based food cart vendor Francis Fernandes said that his mobile cart was funded by a bank loan under an old initiative of the Corporation of the City of Panaji (CCP). “Lately, however, banks have become extremely cautious due to the fear of non-performing assets (NPAs), and have stringent lending norms. With banks tightening their loan guidelines, small businesses are finding it difficult to avail funding,” said Fernandes.
He said small businesses also have the problem of valid licence if the business is not in their name. “There are various issues because of which retailers and traders lose out on bank funding,” he said.
On July 2, the Ministry of Micro, Small and Medium Enterprises (MSME) decided to include retail and wholesale trade under MSMEs for the purpose of priority sector lending after which the RBI issued the notification on July 7.
As many as 2.5 crore retail and wholesale traders across states are expected to benefit from the revised guidelines. The move will let retailers and wholesalers register on the Udyam portal for MSMEs.
The portal offers several advantages such as collateral-free loans, subsidy on bank interest rate, exemption from direct tax laws, overdraft facility with exemption from interest rate, easier approval of licence, concession in electricity bill and ease in applying for government tenders.