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FM Extends Generous Support To MSMEs, Announces Rs 3 Lakh Crore Collateral-free Loan

The move is part of the Rs 20 lakh crore economic package announced by Prime Minister Narendra Modi on Tuesday evening.

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FM Extends Generous Support To MSMEs, Announces Rs 3 Lakh Crore Collateral-free Loan
Finance Minister Nirmala Sitharaman addresses media in New Delhi
Photo by Jitender Gupta/Outlook
FM Extends Generous Support To MSMEs, Announces Rs 3 Lakh Crore Collateral-free Loan
outlookindia.com
2020-05-13T19:46:56+05:30

Finance Minister Nirmala Sitharaman on Wednesday announced a slew of measures to help medium, small and micro enterprises (MSMEs) in tackling financial challenges and also obtain government orders to help them battle the Covid-19 crisis.

Announcing the first set of components of the Rs 20 lakh crore economic stimulus package, she announced up to Rs 3 lakh crore of collateral-free loans for small businesses, including MSMEs. Borrowers with up to Rs 25 crore outstanding and Rs 100 crore turnover would be eligible for the special collateral free loan.

A special provision has been made for 2,00,000 stressed MSMEs with unpaid loans and non-performing assets (NPAs). The finance minister said they would be eligible for subordinate debt provision of Rs 20,000 crores.

The government will make an equity infusion of Rs 50,000 crore through Mother fund-Daughter fund for MSMES that are viable but need handholding. A fund of funds with corpus of Rs 10,000 crore will be set up to help these units expand capacity and help them list on markets if they choose.

The definition of MSMEs has been expanded to help growing companies which stand the risk of losing their special status and connected benefits. There will be no distinction between manufacturing and services sector MSMEs.

In the case of collateral free loans, there will be more money in Mother-Daughter fund for small industry.

There will be a 100 per cent credit guarantee cover to banks and NBFCs on principal and interest. The initiative can be availed till October 31, 2020, and no guarantee fee and fresh collateral would be required.

Carrying forward Prime Minister Narendra Modi’s stated goal of achieving self-reliance, the Finance Minister said no global tenders will be floated by the government for procurement up to Rs 200 crores. The purpose is to provide greater market access to Indian companies including MSMEs and protect them from unfair competition from some foreign players.

Government agencies like railways, highways and other departments will give an extension of 3-6 months to contractors for completion of existing ongoing works without charging penalty for delays. This will cover construction and goods-services work contracts.

There will be a 100 per cent credit guarantee cover to banks and NBFCs on principal and interest. The initiative can be availed till October 31, 2020, and no guarantee fee and fresh collateral would be required.

On the back of the scheme, 45 lakh units can resume business activity and safeguard jobs.

The move is part of the Rs 20 lakh crore economic package announced by Prime Minister Modi on Tuesday evening.

llateral would be required.

Carrying forward Prime Minister Narendra Modi’s stated goal of achieving self-reliance, the Finance Minister said no global tenders will be floated by the government for procurement up to Rs 200 crores. The purpose is to provide greater market access to Indian companies including MSMEs and protect them from unfair competition from some foreign players.

Government agencies like railways, highways and other departments will give an extension of 3-6 months to contractors for completion of existing ongoing works without charging penalty for delays. This will cover construction and goods-services work contracts.

There will be a 100 per cent credit guarantee cover to banks and NBFCs on principal and interest. The initiative can be availed till October 31, 2020, and no guarantee fee and fresh collateral would be required.

On the back of the scheme, 45 lakh units can resume business activity and safeguard jobs.

The move is part of the Rs 20 lakh crore economic package announced by Prime Minister Modi on Tuesday evening.

 

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