Four years after being excluded from the category of micro, small and medium enterprises (MSMEs), the government on Friday, July 2, issued fresh guidelines to reinstate retail and wholesale trades as MSMEs.

In an interview with CNBC-TV18, PN Vasudevan, MD & CEO of Equitas Small Finance Bank; AM Karthik, VP & sector head-financial sector ratings at ICRA and Kumar Rajagopalan, CEO of Retailers Association of India assessed the impact of this move.

“It’s something that we have been talking to the government for some time now and we have happy that the Prime Minister has come in support of the entire industry of wholesalers, traders and retailers and this will support 2.5 crore enterprises,” said Rajagopalan.

Vasudevan hailed the move too, calling it a great benefit from the government to the trading segment but did point out that some clarifications were necessary.

"To the bankers, this will spur more of fund flow from the banks to the trading community. However, the only question we all have, as bankers, that as of June 30; banks have a quarterly target of public sector lending (PSL) also, so as of June 30 do I classify trading loans as PSL or not because this clarification has come on July 2. Therefore, this is one clarification that we still need from the Reserve Bank of India (RBI) or from the government,” he said.

"The sector has Rs 6 lakh crore banking sector exposure and classification of this under MSME guideline is positive in terms of getting additional loans and also it eases from restructuring point of view which is the need of the hour,” analysed Karthik.

For the entire discussion, watch the video

(Edited by : Abhishek Jha)