In the last two decades, the growth curve of the Indian economy has been largely controlled by its Micro, Small, and Medium Enterprises (MSMEs). The sector has done some heavy lifting across operations and is contributing a whopping 40% to the country’s GDP through the 20 lakh crore of goods and services it produces. It is also the engine of livelihood to millions of people. Significantly, the MSME sector continues to drive India’s fortunes despite being marred by various factors such as lack of adequate capital, infrastructural hurdles, inadequate digitalisation, scattered markets, absence of compatible financial partners, and statutory clearances among others. The export from these enterprises is gradually heading north, indicating why an impetus to the sector will only trigger a multiplier impact on economic growth. This trajectory of growth explains how the sector is also shouldering the country’s magnanimous vision to become a five trillion-dollar economy by 2024-25.
Drawing on innovation and adaptability, the MSME sector has particularly shown a brave face as the government set out with its One India, One Tax vision with GST regulations.Even though in the initial stages, the MSME industry faced problems with cash flows and GST compliance, the bumpy roads are now behind these enterprises. Many MSME businesses are moving towards a formal economy which is clear from the increase in the tax-payer base. This is not only giving them more visibility but also sprouting new opportunities in the market. This formalisation of the sector and the subsequent need for transparency in accounting procedures means that MSMEs today need an agile financial partner that can cater to their needs and help them explore new opportunities in the global market. The sector is relentlessly work-horsing to tap the demand in the local and global markets and are also acting as a potential job creator in times of a currency slump.
To help the MSME sector realise its full potential, Citi has come up with a host of banking and financial solutions to maximize business growth. As a business banking partner, Citi, with its CitiBusiness proposition, is finetuning its services as per the evolving requirements of the sector. It aims to to become a trusted MSME partner to help the sector tide over their financial woes and emerge as multinationals of the future. With opportunities galore, it’s time micro, small, and medium enterprises in India take the leap ahead with Citi’s global expertise and services.
Trade and Foreign Exchange Solutions
India has one of the largest MSME industry in the world that has been making a massive contribution to its economy. This is industry contributes to ~50% of country’s exports. But for most MSMEs, global markets are a confusing space. With Citi’s CitiBusiness proposition, it is partnering with MSMEs to provide them with cost-effective Trade & foreign solutions to reduce risks and uncertainties associated with cross border transactions. The bank is allowing these enterprises to power both global and domestic trade by minimising buyer’s cost, maximising seller’s offer, and managing the commercial, political and currency risks on both sides with Citi’s trade services and trade finance products. The bank has also introduced the CitiFX Pulse platform that is designed to give MSMEs total control over their forex business. Whether it is multiple currency EEFC accounts for inward and outward remittances, managing foreign exchange risks through forward contracts, or faster remittances across countries because of Citi’s presence across 100 countries, the bank is set to give a big leap to MSMEs to rebuild their financial strategy and manage their risk appetite.
Guidance to customers on FDI/ODI regulations of FEMA
For a lot of MSMEs, the changing regulations around Foreign Direct Investment and Outward Direct Investment can be confusing. Additionally, frequent updates in the Federal Emergency Management Agency (FEMA) guidelines often results in lack of clarity around its implications to the MSME community. In a country where capital is not readily available, understanding FDI and ODI becomes the need of the hour to make the right domestic and international investments. In this regard, Citi is simplifying business banking by offering guidance to MSMEs around the policy regulations around these two crucial factors that are an important source of funds & expansion for companies. With CitiBusiness® OneWorld, the bank is providing a service delivery model to multinational MSMEs which are looking at capitalizing on India’s growth story, so that they can enter the Indian market, establish their enterprise, and successfully operate and grow in robust Indian economy . To help an enterprise understand the tides of the market, Citi offers service support for Capital Account transactions (FDI/ECB/ODI), guidance on regulatory requirements, bank account for the business and employees, FX market advisory, liquidity, cash and working capital management, and business insurance as well.
Team of specialists
To create the best outcome for business, it is important to understand market dynamics and risks associated with the same. For many MSMEs who have ventured into the global market for the first time, the presence of a reliable banking partner for handholding is crucial to overall success. Citi ensures that each enterprise associated with it is getting a comprehensive insight into trade regulations & requirements of exploring global markets, so that they can grow and take a leap ahead. Each MSME client is assigned with specificteam of specialists to assist with Forex, Trade and Lending transactions and a well-trained Relationship Manager. This is further supported by a dedicated service manager to assist these businesses in their day-to-day banking needs.
Cash and Liquidity Management
For MSMEs, increasing profitability and reducing risks is a goal that remains at the forefront of operations. This is why a growing number of micro, small, and medium businesses are relying on cash management partners to optimize their net earnings by managing, and eventually decreasing, their liquid assets. Citi offers cash and liquidity management services to the growing MSME sector in India. CitiBusiness here acts as a financial partner for MSMEs that provides cost effective Cash Management solutions across borders with optimum flexibility. The bank holds liquidity efficiency as a determinant for profit and offers seamless banking with cash management solutions for payments and receivables, cash and cheque collection services, and E-Collect services through which customers can enjoy customized electronics receivables solution with same day credit, along with intra-day MIS for NEFT and RTGS receipts. Further, with Citi, MSMEs also enjoy easy bulk payments, online tax payments and electronic debit clearing services.
CitiBusiness World Debit Card
One major Citi offering for MSME is its World Debit card that is making business saving easier than ever before. Every CitiBusiness Mastercard Business card holder gets access to the Mastercard Easy Savings Program and receives all program rebates. Apart from letting owners save on business services, Mastercard World Debit Card owners get to avail a plethora of offers on office supplies, travel, dining, fuel, and other conveniences. What makes the card even more equipped is that it also comes with the MasterCard Global Linker that is a one of a kind networking platform for MSMEs around the world.This cloud-based program brings together small and medium businesses on a single global business network and provides every enterprise with a digital identity that allows them to stay connected.
In a country like India where the twin problem of poverty and unemployment continues to plague the economy, supporting the growth of MSMEs is crucial to sustainable development. As every individual MSME continues to reform and transform itself, it is pertinent for financial institutions to provide them with the resources to scale ahead. Citi, with its comprehensive portfolio of business banking solutions, is the vehicle for inclusive growth to help these enterprises keep up with the rapidly changing business environment.