Kashmir Impulse Desk

Srinagar, May 23 

The Kashmir Chamber of Commerce and Industry (KCCI) on Friday stressed the need for effective implementation of the Credit Guarantee Scheme for MSMEs in Jammu and Kashmir, saying entrepreneurs in the region continue to face difficulties in accessing collateral-free loans to start and expand businesses.

KCCI president Javid Ahmad Tenga, accompanied by executive committee member Ashiq Hussain Shangloo, submitted a detailed memorandum to Tiruchi Siva, chairperson of the Department-related Parliamentary Standing Committee on Industry, and other members of Parliament during the committee’s ongoing review of Credit Guarantee Schemes for MSMEs in Jammu and Kashmir.

The chamber said banks in Jammu and Kashmir were still demanding collateral from borrowers even in cases where loans were fully covered under the Credit Guarantee Scheme, undermining the purpose of the programme.

“Banks are still demanding collateral from borrowers even for loans fully covered under the Credit Guarantee Scheme. This defeats the entire purpose of the scheme. Young entrepreneurs in Kashmir must be able to access credit without pledging their homes and properties,” Tenga said.

He urged the parliamentary panel to direct the Reserve Bank of India to strictly enforce collateral-free lending norms and hold non-compliant banks accountable.

During the meeting, KCCI presented bank-wise performance data of scheduled commercial banks under the Credit Guarantee Scheme in Jammu and Kashmir for FY 2023-24, FY 2024-25 and FY 2025-26.

According to the chamber, overall coverage under the scheme increased from Rs 6110 crore to Rs 9830 crore over the three-year period. However, it said the distribution of credit among banks remained heavily skewed.

KCCI commended J&K Bank for its contribution under the scheme, saying the bank accounted for more than 66 percent of the total credit disbursed under the Credit Guarantee Scheme in the Union Territory. 

At the same time, it expressed concern over what it described as negligible participation by several major national banks.

The memorandum also called for annual audits of all banks operating in Jammu and Kashmir to assess compliance under the CGTMSE scheme. 

It recommended time-bound disposal of loan applications – 21 days for loans up to Rs 25 lakh and 30 days for loans up to Rs 2 crore – along with mandatory written reasons in cases of rejection.

KCCI further sought enhancement of guarantee cover to 90 percent for J&K MSMEs on loans up to Rs 5 crore for a period of 10 years, a 50 percent reduction in annual guarantee fees for five years, and full guarantee cover for women entrepreneurs and registered artisans.

The chamber also raised concerns related to the New Central Sector Scheme (NCSS) for Industrial Development of Jammu and Kashmir, introduced by the Department for Promotion of Industry and Internal Trade in February 2021 with an outlay of Rs 28,400 crore.

KCCI demanded an additional allocation of Rs 75,000 crore under the scheme with a dedicated 25 percent reservation for local entrepreneurs to address what it described as a large backlog of eligible but credit-starved businesses unable to benefit since the scheme’s launch.

Tenga said Kashmir had a young and skilled entrepreneurial population that needed fair access to finance and institutional support to build sustainable enterprises and generate employment. 

He expressed hope that the parliamentary committee’s intervention would lead to meaningful and time-bound policy reforms for the MSME sector in Jammu and Kashmir.