Srinagar, May 22 (KNO): The Kashmir Chamber of Commerce and Industry (KCCI) on Friday urged strict implementation of the Credit Guarantee Scheme for MSMEs in Jammu & Kashmir, alleging that banks continue to demand collateral despite government-backed guarantees.
During a meeting with the Parliamentary Standing Committee on Industry, KCCI also called for enhanced financial support and a larger industrial package to boost entrepreneurship and employment in the region.
In a statement issued to the news agency—Kashmir News Observer (KNO), a spokesperson said the Chamber stressed the need for effective implementation of the scheme so that entrepreneurs can access collateral-free, guarantee-backed loans to start and grow businesses.
He said KCCI President Javid Ahmad Tenga, accompanied by Executive Committee Member Ashiq Hussain Shangloo, submitted a detailed memorandum to Mr Tiruchi Siva, Chairperson of the Department-Related Parliamentary Standing Committee on Industry, during its review of MSME credit guarantee schemes in J&K.
“Banks are still demanding collateral even for loans fully covered under the Credit Guarantee Scheme. This defeats the purpose of the scheme. Young entrepreneurs must be able to access credit without pledging their homes and properties,” Tenga said, urging the Standing Committee to direct RBI to enforce strict compliance and hold non-compliant banks accountable.
He said KCCI also presented bank-wise data on performance under the scheme for FY 2023-24, FY 2024-25, and FY 2025-26, revealing that overall coverage has increased from Rs 6,110 crore to Rs 9,830 crore over three years, though distribution among banks remains highly skewed.
The Chamber lauded the role of J&K Bank, which accounts for over 66 percent of total credit disbursed under the scheme, while expressing concern over the limited participation of several major national banks.
The memorandum also called for annual audits of banks in J&K, time-bound loan disposal of 21 days for loans up to Rs 25 lakh and 30 days for loans up to Rs 2 crore and mandatory written reasons for all loan rejections.
KCCI further sought an enhanced guarantee cover of 90 percent for MSME loans up to Rs 5 crore for 10 years, a 50 percent reduction in guarantee fees for five years, and 100 percent coverage for women entrepreneurs and registered artisans.
It also raised concerns over the New Central Sector Scheme (NCSS) for Industrial Development of J&K, launched by DPIIT in February 2021 with an outlay of Rs 28,400 crore up to 2036-37.
The Chamber demanded an additional Rs 75,000 crore allocation under the scheme with a 25 percent reservation for local entrepreneurs, citing a large backlog of eligible but credit-starved businesses in the region.
KCCI President Javid Ahmad Tenga said Kashmir has a young and skilled workforce that needs better access to credit and institutional support to build sustainable enterprises and generate employment. He expressed hope that the Parliamentary Committee’s intervention would lead to time-bound policy reforms for the MSME sector in J&K—(KNO)