Srinagar, May 13 (KNO): The Kashmir Chamber of Commerce and Industry (KCC&I) has called for urgent reforms to strengthen MSME financing in Jammu and Kashmir, urging wider awareness of RBI-backed digital platforms like TReDS, easier access to collateral-free credit, and a more humane approach to stressed business accounts.
Speaking at the 70th meeting of the Empowered Committee on MSMEs held in Jammu, the Chamber, in a statement issued to the news agency—Kashmir News Observer (KNO), flagged low credit flow, weak scheme awareness, and rising financial stress among small businesses, startups, and tourism-linked enterprises across the Union Territory.
The statement said the Kashmir Chamber of Commerce and Industry (KCC&I) participated in the meeting of the Empowered Committee on Micro, Small and Medium Enterprises (MSMEs) for the Union Territories of Jammu & Kashmir and Ladakh, held at Jammu, where it strongly advocated enhanced MSME financing, improved awareness of RBI-backed digital platforms, easier collateral-free credit access, and a more practical approach towards stressed business accounts.
The Chamber was represented by its JVP, Mr. Farooq Amin, who raised several issues concerning MSMEs, industrial units, startups, tourism-linked enterprises, handicrafts, and small businesses across Jammu and Kashmir.
During the meeting, KCC&I highlighted the acute lack of awareness regarding the Trade Receivables Discounting System (TReDS), an RBI-regulated digital platform designed to help MSMEs unlock working capital by discounting trade receivables and invoices with banks and NBFCs in a transparent, paperless, and collateral-free manner.
The Chamber stated that TReDS has the potential to significantly improve liquidity for MSMEs by enabling timely payments against invoices raised on corporates, PSUs, and government departments. However, it noted that awareness among MSMEs in Jammu and Kashmir remains extremely low. Mr. Farooq Amin said that earlier outreach on TReDS would have significantly eased the liquidity constraints currently being faced by the MSME sector.
The Chamber urged banks, financial institutions, TReDS operators, and government departments to undertake aggressive awareness campaigns and stakeholder outreach programmes across industrial estates and business clusters in the Union Territory.
Regional Director, RBI J&K, Mr. Chandrashekhar Azad, while responding to the concerns, stressed that Udyam Registration is mandatory for MSMEs to avail benefits under several government and RBI-supported schemes. He directed banks to intensify awareness regarding Udyam Registration and asked that KCC&I be actively involved in the campaign for wider outreach among entrepreneurs.
He also instructed banks and TReDS-related institutions to enhance publicity and awareness of the platform among MSMEs and industrial units across Jammu and Kashmir.
KCC&I also raised concerns over the low disbursement of loans under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme in Jammu and Kashmir. The Chamber said that despite the scheme being designed for collateral-free lending, entrepreneurs continue to face demands for collateral security, personal guarantees, and procedural hurdles.
It observed that credit disbursement under MSME schemes in Jammu and Kashmir remains significantly lower than in several other regions of the country, calling for corrective measures.
KCC&I stressed that the prevailing unemployment situation in Jammu and Kashmir requires easier access to low-interest credit and simplified financing norms for startups, youth entrepreneurs, and existing business units.
It urged banks to facilitate financial assistance under flexible, entrepreneur-friendly norms without excessive reliance on collateral and guarantees, stating that MSME financing should promote entrepreneurship rather than create procedural barriers.
The Chamber also flagged rigid banking practices, particularly excessive dependence on CIBIL scores and technical classifications without considering the extraordinary circumstances faced by businesses in Jammu and Kashmir.
It pointed out that several sectors, especially tourism and allied industries, have suffered repeated setbacks due to unforeseen developments, including the impact on tourism following the Pahalgam incident in April last year and other disruptions affecting business activity and repayment capacity.
KCC&I urged banks to adopt a pragmatic and humanitarian approach in dealing with stressed MSME accounts and avoid coercive recovery practices, public “name and shame” measures, and harsh classifications that further burden distressed enterprises.
It also demanded that entrepreneurs facing genuine financial distress be provided a dignified and consultative resolution mechanism, and sought inclusion of the Chamber in committees dealing with stressed MSME accounts and NPAs.
The RBI Regional Director advised banks to engage more actively with KCC&I and leverage its role in resolving issues related to collateral requirements, MSME distress, and financing bottlenecks.
KCC&I also highlighted the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, stressing the need for wider awareness and easier access to 100 per cent government-guaranteed collateral-free credit support for distressed MSMEs.
It further raised concern over high rejection rates under self-employment and livelihood schemes, including PM SVANidhi, PM Mudra Yojana, and PM Vishwakarma Yojana, citing procedural delays, documentation hurdles, and lack of awareness.
The Chamber called for a comprehensive review of rejection patterns to ensure eligible beneficiaries are not denied institutional support, and urged regular financing reviews of industrial clusters to ensure equitable credit flow to employment-generating sectors in Jammu and Kashmir.
KCC&I also appealed to MSMEs, startups, traders, artisans, and industrial units to complete Udyam Registration at the earliest to avail benefits under various government and RBI-backed schemes—(KNO)