1st May 2010
Srinagar
Mega workshop on CGTMSE held. "We need an enterprise policy":Dr. Drabu
Urging entrepreneurs to leverage finances and evolve organizational behavior, Dr Haseeb A. Drabu, Chairman & CE, J&K Bank has called for the need of framing a comprehensive enterprise policy.
"We have to understand the fact that the essential element of our economy is not industry or corporate but ours is an enterprise economy. Thus, what we direly need is a comprehensive enterprise policy", Dr. Drabu emphasized while addressing a mega workshop on "Credit Guarantee Fund Scheme for Micro and Small Enterprises", organized jointly by J&K Bank, CGTMSE (Credit Guarantee Fund Trust For Micro & Small Enterprise) and (SIDBI) Small Industries Development Bank of India, which was inaugurated by him here at SKICC today.
Laying emphasis on confidence based lending, Dr. Drabu said that lack of confidence of financial institutions in the modus operandi of businessmen and their naïve attitude to their businesses in J&K was the main reason behind low flow of credit to the MSEs.
Describing Credit Guarantee Scheme as a transition and opportunity for the banks to lend to the MSE sector under conditions of reduced risk, Drabu hoped that the scheme establishes a relationship of comfort between lender and borrower.
However, he was quick to add that the scheme should not be considered as an end in itself. "Entrepreneurs must capitalize on it; use it for creating credit history for themselves rather than weakening their will".
Dr. Drabu further said that banks were finding it difficult to finance MSEs as the entrepreneurs in this sector were not following standard accounting procedures and often had less collateral security to offer. "CGFS reduces that risk and acts as a sort of insurance which in turn boosts confidence of the banks to lend more to this sector", he said.
C.V.K.D Prabu of CGTMSE in his address said that credit under the scheme is available on softer terms as compared to the standard loans as a major part of the risk is borne by the CGTMSE. Giving details of the scheme, Prabu said that the scheme provides guarantee up to 85% of the credit subject to the limit of Rs.100 lacs.
"The scheme provides 5% increase in guarantee amount for women entrepreneurs", Prabu revealed.
Notably, Credit Guarantee Fund Trust for Micro and Small Enterprises (CGFTMSE) was set up by the government of India and SIDBI in 2000-01 with a corpus of Rs 125 crore with an objective to create an institutional mechanism to support banks and financial institutions to ensure availability of credit facility and easy access to institutional funds to the MSE sector. CGFTMSE covers registered member lending institutions (MLI) which include Regional Rural Banks, public and private sector banks, foreign banks and financial institutions. While the MLI strength of CGTMSE is 90, J&K Bank has recently been granted the MLI status.
Speaking on the occasion Kachoo Isfandyar Khan, Director Industries & Commerce thanked the J&K Bank leadership for giving a new direction to entrepreneur finance.
Hoping that the Credit Guarantee Scheme would instill confidence in banks to lend extensively to the industrial sector, Khan urged all the banks operating in the state to make the most of the Scheme to ensure greater volumes of credit flow to industry with special reference to MSEs.
Among others present on the occasion included A K Mehta, Executive Director, J&K Bank, Ajit Singh, Senior President, J&K Bank, N. Srivastav, Assistant General Manager, SIDBI, M S Wani, Vice-President, J&K Bank and representatives of various banks and officials of Entrepreneur Development Institute.
Earlier, Parvez Ahmed, Bank's President for Advances & Asset Planning described the Credit Guarantee Scheme as part of the larger strategy to fine tune lending strategies to the MSE sector.
"We have to understand the fact that the essential element of our economy is not industry or corporate but ours is an enterprise economy. Thus, what we direly need is a comprehensive enterprise policy", Dr. Drabu emphasized while addressing a mega workshop on "Credit Guarantee Fund Scheme for Micro and Small Enterprises", organized jointly by J&K Bank, CGTMSE (Credit Guarantee Fund Trust For Micro & Small Enterprise) and (SIDBI) Small Industries Development Bank of India, which was inaugurated by him here at SKICC today.
Laying emphasis on confidence based lending, Dr. Drabu said that lack of confidence of financial institutions in the modus operandi of businessmen and their naïve attitude to their businesses in J&K was the main reason behind low flow of credit to the MSEs.
Describing Credit Guarantee Scheme as a transition and opportunity for the banks to lend to the MSE sector under conditions of reduced risk, Drabu hoped that the scheme establishes a relationship of comfort between lender and borrower.
However, he was quick to add that the scheme should not be considered as an end in itself. "Entrepreneurs must capitalize on it; use it for creating credit history for themselves rather than weakening their will".
Dr. Drabu further said that banks were finding it difficult to finance MSEs as the entrepreneurs in this sector were not following standard accounting procedures and often had less collateral security to offer. "CGFS reduces that risk and acts as a sort of insurance which in turn boosts confidence of the banks to lend more to this sector", he said.
C.V.K.D Prabu of CGTMSE in his address said that credit under the scheme is available on softer terms as compared to the standard loans as a major part of the risk is borne by the CGTMSE. Giving details of the scheme, Prabu said that the scheme provides guarantee up to 85% of the credit subject to the limit of Rs.100 lacs.
"The scheme provides 5% increase in guarantee amount for women entrepreneurs", Prabu revealed.
Notably, Credit Guarantee Fund Trust for Micro and Small Enterprises (CGFTMSE) was set up by the government of India and SIDBI in 2000-01 with a corpus of Rs 125 crore with an objective to create an institutional mechanism to support banks and financial institutions to ensure availability of credit facility and easy access to institutional funds to the MSE sector. CGFTMSE covers registered member lending institutions (MLI) which include Regional Rural Banks, public and private sector banks, foreign banks and financial institutions. While the MLI strength of CGTMSE is 90, J&K Bank has recently been granted the MLI status.
Speaking on the occasion Kachoo Isfandyar Khan, Director Industries & Commerce thanked the J&K Bank leadership for giving a new direction to entrepreneur finance.
Hoping that the Credit Guarantee Scheme would instill confidence in banks to lend extensively to the industrial sector, Khan urged all the banks operating in the state to make the most of the Scheme to ensure greater volumes of credit flow to industry with special reference to MSEs.
Among others present on the occasion included A K Mehta, Executive Director, J&K Bank, Ajit Singh, Senior President, J&K Bank, N. Srivastav, Assistant General Manager, SIDBI, M S Wani, Vice-President, J&K Bank and representatives of various banks and officials of Entrepreneur Development Institute.
Earlier, Parvez Ahmed, Bank's President for Advances & Asset Planning described the Credit Guarantee Scheme as part of the larger strategy to fine tune lending strategies to the MSE sector.