We all know that MSMEs occupy a prominent place in the policy architecture of Indian economy because of its significant contribution to the GDP, matchless capacity for employment generation and for providing an effective medium for growth of start-ups and innovation. 

As per IFC Report, 'Closing the Credit Gap for Formal and Informal Micro, Small, and Medium Enterprises' , access to finance is one of the most important constraints faced by MSMEs, in addition to weak investment climate and poor infrastructure. The financing constraint is more severe in less-developed countries, where financial markets are not well-developed, regulatory and legal frameworks are weak, informational asymmetries are persistent, and risk management systems are not as robust. A developed financial sector helps mobilize and allocate resources, and manage risks, contributing to private sector development. Finance helps economic growth, and in turn, job creation. Data show that the financial sector provides more credit to the private sector and serves a larger proportion of firms in developed countries. Domestic private credit is around 150 percent of GDP in high income countries, while it is only around 30 percent in low income countries.

It further says that studies have underscored the importance of SMEs in contributing to growth and job creation, putting SME sector development among the key topics on the global development agenda and SMEs are closely linked with economic growth. For example, studies reveal that the relative size of the SME sector in a country and economic growth are positively related and formal SMEs contribute to 50 percent of GDP on average in high income countries. In addition, there is evidence that SMEs are the major sources of employment in many economies.

Challenge of Formal Finance

In the Indian context, the MSME sector has been extremely important for spurring economic growth, contribution to GDP and creation of employment opportunities. However, the ability of Indian MSMEs to spur growth and foster job creation is limited by their ability to find adequate formal finance. Their growth appetite is constrained by challenges in accessing formal finance and getting hand holding support. With more than 38% contribution to India 's GDP  including the services sector, this MSME sector requires more than just credit. It requires coordinated and one stop platform for both credit and credit plus services.

In this context, in order to help the MSME sector in India achieve its true potential and cater to their diverse needs,  SIDBI has been taking strategic initiatives for addressing various non-financial gaps for capacity building of the MSME sector, as well as the bankers  under its “Credit Plus” approach. 

With a view to enlarge its foot print in delivery of products and services in MSME eco-system, SIDBI launched  Udyamimitra (www.udaymimitra.in) which is an enabling platform that  leverages IT architecture of Stand-Up Mitra portal and aims at instilling ease of access to MSMEs financial and non-financial service needs. The Portal, as a virtual market place endeavours to provide 'End to End' solutions not only for credit delivery but also for the host of Credit-plus services by way of hand holding support, application tracking, multiple interface with stakeholders (i.e. banks, service providers, applicants). The important features include:

I. Matchmaking Platform- It provides a unique match making platform to MSME loan seekers, lenders as also handholding agencies. The portal has designed capability to accept varied MSME loan applications with ease.

II. Inclusive Access to All - It provides access to both financial (125000 bank branches) and non financial services (17000+ handholding agencies) with three distinct features viz. (i) Seek Handholding support; (ii) select and apply for loans to preferred banks; (iii) enable faster loan processing.

On entering Portal, the entrepreneur is guided for registration and login. Based on information furnished by a prospective entrepreneur the system categorizes the applicants into 'trainee' (those needing training or other help before they are ready for entrepreneurship) and 'ready' borrowers (borrower feels he/she is ready to approach lenders for loan).

It then guides them to access handholding support or direct loan application module as per their requirement. Ready borrower can submit its loan application online with instant acknowledgement through SMS/email. The submitted application flows to the preferred bank as selected by the loan applicant with online notification to the Nodal Officer of the bank as also Lead District Managers. It facilitates:

III. Access to Non Financial Services - The applicant may search for contact details of the required handholding agency in the vicinity of his place of proposed enterprise (based on the state and district given at the time of registration) to avail services.

One of the most helpful feature of this portal is that it has mapped hand holding agencies in different areas of expertise viz. financial training, skill development, project report preparation, application filing, work sheds and access to margin money/subsidy support being operated by various state/central organizations/corporations. The aim is to evolve this as a portal attending to the entrepreneurs need during entire enterprise development cycle.

Access to Finance - Presently, 125000 branches (public sector banks, private sector banks, foreign banks) of 38 banks and 56 RRBs are mapped on the portal. The portal replaces the manual operations with electronic platform where pre-sanction process shall get standardised in a simpler way in all banks. The portal has a MARKET PLACE where bankers would be able to compete themselves in their loan delivery mechanism.

Virtual Market Place

While submitting the loan applications, the applicants have the option of choosing upto 3 preferred bank/bank branches. The Portal is designed to obtain application forms, gather and provide information, enable registration, provide links for handholding and assist in tracking request for handholding or loan.

At the virtual loan market place, a preferred banker or any other banker who are active, undertake P3 (peruse, pick and process) on the loan applications offline as also mark their sanctions and rejections online. Applications from the virtual loan market are picked up by lenders on the basis of the preferences of the applicants (i.e. both Ready and Trainee Borrowers) and disposal of the applications are expected to be ensured as per Code of Commitment for its Customers adopted by respective banks. All submitted applications are available at virtual market place for credit access to entrepreneurs and status visible to all stakeholders viz. lenders, handholding agencies, applicants, SIDBI, NABARD and Govt. agencies till the same is disbursed by one of the banks.

Integrated Approach

The portal has integrated all the financial and developmental needs for the MSMEs under one place starting from credit needs upto Rs.10 lakh to Rs. 1 crore and beyond. Any MSME entrepreneur with its diverse needs can approach the portal for credit and the portal provides faster solutions in a very comfortable manner.  The portal enables an entrepreneur  to access enterprise loans including MUDRA, Stand-Up-India, MSME loans  and access to handholding support and knowledge.

This' udyamimitra.in' a virtual loan market  and credit plus initiative undertaken by SIDBI as part of providing  solutions through  digital way,  is an unique and  significant  milestone  that will act like a catalyst in helping the MSMEs taste growth and success  and shall provide an impetus in fostering a million MSMEs to bloom. 

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