Jammu, May 12: The Kashmir Chamber of Commerce and Industry (KCC&I) on Monday raised concerns over MSME financing challenges in Jammu and Kashmir during the 70th meeting of the Empowered Committee on Micro, Small and Medium Enterprises (MSMEs) for the Union Territories of Jammu and Kashmir and Ladakh.
The Chamber called for easier access to collateral-free credit, wider awareness regarding RBI-backed digital financing platforms and a more practical approach towards stressed business accounts in the Union Territory.
KCC&I was represented at the meeting in Jammu by its Junior Vice President Farooq Amin, who highlighted issues affecting MSMEs, industrial units, startups, tourism-linked enterprises, handicrafts and small businesses across Jammu and Kashmir.
During the discussions, the Chamber expressed concern over low awareness about the Trade Receivables Discounting System (TReDS), a Reserve Bank of India-regulated digital platform that enables MSMEs to access working capital through discounting of invoices in a paperless and collateral-free manner.
According to KCC&I, the platform could significantly improve liquidity for MSMEs by ensuring timely payments against invoices raised on corporates, public sector undertakings and government departments.
Farooq Amin said lack of awareness regarding TReDS had prevented businesses in Jammu and Kashmir from effectively utilising the platform to address liquidity constraints.
The Chamber urged banks, financial institutions, TReDS operators and government departments to launch awareness drives and outreach programmes across industrial estates and business clusters in the Union Territory.
Responding to the issues raised, Chandrashekhar Azad, Regional Director of the Reserve Bank of India in Jammu and Kashmir, said Udyam Registration was mandatory for MSMEs to avail benefits under several government and RBI-supported schemes.
He directed banks to intensify awareness campaigns regarding Udyam Registration and instructed that KCC&I should be actively involved in outreach programmes aimed at entrepreneurs and businesses.
The RBI official also asked banks and TReDS-related institutions to increase publicity about the digital financing platform among MSMEs and industrial units.
KCC&I further raised concerns regarding low loan disbursement under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme in Jammu and Kashmir. The Chamber alleged that despite the scheme being designed to facilitate collateral-free lending, many businesses continued to face demands for collateral security and personal guarantees.
The Chamber also pointed to lower average loan disbursement figures under MSME schemes in Jammu and Kashmir compared to several other parts of the country and sought corrective measures.
Highlighting the region’s unemployment situation, KCC&I urged banks to simplify financing procedures and provide easier access to low-interest credit for startups, youth entrepreneurs and existing businesses.
The Chamber also criticised rigid banking practices linked to CIBIL scores and technical classifications, stating that many businesses in Jammu and Kashmir had faced repeated economic disruptions, particularly the tourism sector following the Pahalgam incident last year.
KCC&I urged banks to adopt a humanitarian and pragmatic approach towards stressed MSME accounts and avoid coercive recovery measures and public “name and shame” practices.
The Chamber also demanded representation in consultative committees dealing with stressed MSME accounts and non-performing assets (NPAs) to help facilitate coordinated solutions between banks and entrepreneurs.
The RBI Regional Director advised banks to engage more actively with KCC&I in resolving issues relating to collateral requirements, MSME distress and financing bottlenecks.
KCC&I additionally highlighted the importance of the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 and sought wider awareness and easier access to the scheme for businesses facing liquidity constraints.
The Chamber also raised concerns over high rejection rates under self-employment schemes such as the PM SVANidhi, Pradhan Mantri Mudra Yojana and PM Vishwakarma Yojana.
According to KCC&I, procedural delays, documentation hurdles and lack of awareness were preventing many eligible applicants from availing benefits under these schemes.
The Chamber urged banks and financial institutions to ensure equitable credit flow to sectors contributing significantly to employment generation and exports from Jammu and Kashmir, while also appealing to businesses and entrepreneurs to complete their Udyam Registration to access government and institutional support schemes.
