Namaste Credit Archives

Union finance minister Nirmala Sitharaman had introduced Union Budget 2019 on July 5, 2019 and announced multiple benefits to ease credit access for micro, small and medium enterprises (MSMEs). While a lot of issues surrounding MSME sector were addressed in the new Union Budget, the existing structural problems of India’s business environment such as heavy tax compliance load and expensive credit cannot be wished away. The budget was seen as a good starting point, however, a survey by Namaste Credit has revealed that only 53% of MSMEs believe that the Union Budget 2019 will positively impact MSMEs in the next one year. Further, 26% of them feel the budget may not have any impact on MSMEs. The survey was taken of 7000 loan professionals and SME influencer community comprising of Chartered Accountants, loan agents, financial planners, across major cities in India. Founded in 2014 by Gaurav Anand, Lucas Bianchi and Krishnan Parameswaran, Namaste Credit is an online platform that works on improving the entire loan process from application to underwriting for SMEs. Here’s a brief of the announcements for the MSME sector during the Union Budget 2019: Raising the ceiling for the lower corporate tax rate to 25% of companies with an annual turnover of up to INR 400 Cr from INR 250 Cr, enabling them to reinvest and expand Enabling use of fintech in financing space for the growth of MSMEs For ease of access to credit for MSMEs, the government has provided a service for MSMEs to avail INR 1 Cr credit within 59 minutes through a dedicated online portal. To discourage cash payments, TDS of 2% for withdrawals of INR 1 Cr in a year from bank accounts for business payment purposes has been proposed Extended the pension benefit to about 3 Cr three crore retail traders & small shopkeepers whose annual turnover is less than INR 1.5 Cr under a new scheme namely Pradhan Mantri Karam Yogi Maan-dhan Scheme The survey further said that 54% of the respondents feel that the budget is going to impact their (the loan professionals) business in the next year positively. Here are other interesting assessments of the survey: Close to 70% of the respondents feel that PSBLoansIn59Minutes is helpful for MSMEs owing to attributes like faster loan approval rates, easy to use interface 65% of respondents favour paying and collecting payments through digital platforms About 44% feel that zero MDR charges for merchants on digital payments is a positive move by the government, while about 37% pessimistic about it Only 43% of respondents find that Interchangeability of PAN and Aadhaar to file a tax return is a positive step. 40% feel that the initiative will impact them negatively. 53% of respondents are optimistic about the pension scheme About 54% of the respondents feel negative to no impact from the currently introduced corporate tax rebate “While the Union Budget 2019 is an overall pro-MSME budget, it is interesting to note that it has left the MSME wanting for more. It is noteworthy that digital initiatives to facilitate MSME lending are well received. It is also an indication that the government could put more emphasis on spreading awareness about such schemes and probably launch more such initiatives to help the MSME sector,” said Gaurav Anand, co-founder and director of Namaste Credit. This sector currently contributes to over 28% of the GDP, 45% to manufacturing output, more than 40% of exports. According to DataLabs by Inc42, the total GVA (gross value added) of the Indian MSME sector by FY’20 is estimated to be $866 Bn, growing at a CAGR of 11.12%.

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