Srinagar, May 21: The Kashmir Chamber of Commerce and Industry (KCCI) has called for strict implementation of the Credit Guarantee Scheme for Micro, Small and Medium Enterprises (MSMEs) in Jammu and Kashmir, alleging that banks continue to demand collateral despite loans being covered under the guarantee mechanism.
A KCCI delegation led by its President Javid Ahmad Tenga, along with Executive Committee Member Ashiq Hussain Shangloo, submitted a memorandum to Tiruchi Siva and members of the Parliamentary Standing Committee on Industry during the panel’s ongoing review of Credit Guarantee Schemes for MSMEs in Jammu and Kashmir.
The Chamber said the objective of the Credit Guarantee Scheme was being undermined as several banks were allegedly insisting on collateral even for loans fully covered under the scheme.
“Young entrepreneurs in Kashmir must be able to access credit without pledging their homes and properties,” Javid Ahmad Tenga said, urging the committee to direct the Reserve Bank of India to strictly enforce collateral-free lending norms and take action against non-compliant banks.
During the interaction, KCCI presented bank-wise data on the performance of scheduled commercial banks under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme in Jammu and Kashmir for three consecutive financial years — 2023-24, 2024-25 and 2025-26.
According to the Chamber, overall credit guarantee coverage in the Union Territory increased from Rs 6,110 crore to Rs 9,830 crore during the three-year period. However, it expressed concern over what it termed as “highly skewed” participation among banks.
KCCI praised Jammu and Kashmir Bank for its contribution under the scheme, stating that the bank alone accounted for over 66 per cent of the total credit disbursed under the Credit Guarantee Scheme in Jammu and Kashmir.
At the same time, the Chamber expressed concern over the limited participation of several major national banks in extending credit support to MSMEs in the region.
The memorandum submitted by KCCI proposed annual audits of banks operating in Jammu and Kashmir to assess compliance under the CGTMSE scheme. It also sought time-bound disposal of loan applications, recommending a 21-day limit for loans up to Rs 25 lakh and 30 days for loans up to Rs 2 crore, along with mandatory written reasons for rejection in declined cases.
The Chamber further demanded enhancement of guarantee cover to 90 per cent for MSMEs in Jammu and Kashmir on loans up to Rs 5 crore for a period of 10 years. It also sought a 50 per cent reduction in annual guarantee fees for five years and full guarantee coverage for women entrepreneurs and registered artisans.
KCCI also raised concerns regarding implementation of the New Central Sector Scheme for Industrial Development of Jammu and Kashmir (NCSS), which was notified by the Department for Promotion of Industry and Internal Trade in February 2021 with a financial outlay of Rs 28,400 crore.
The Chamber demanded an additional allocation of Rs 75,000 crore under the scheme with a dedicated 25 per cent reservation for local entrepreneurs to address what it described as a growing backlog of eligible but credit-starved businesses in Jammu and Kashmir.
Javid Ahmad Tenga said Jammu and Kashmir had a large pool of young and skilled entrepreneurs who required fair access to institutional credit and policy support to build sustainable businesses and generate employment opportunities.
He expressed hope that the Parliamentary Standing Committee’s intervention would lead to meaningful and time-bound reforms for the MSME sector in Jammu and Kashmir.
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