Collateral-free loans for MSMEs


After Prime Minister Narendra Modi announced an economic stimulus package for ₹20-lakh-crore (estimated at 10% of the GDP), yesterday, the Finance Minister Ms. Nirmala Sitharaman today held a press conference to share details about the same.

Ms. Sitharaman said she will address issues of land, labor, liquidity, and law. The intention of the Ministry is to build local brands and integrate them into the global supply chain.

A ₹3 lakh crores collateral-free automatic loans for businesses, particularly MSMEs, has been announced. Collateral free loan to be provided to SMEs with 12-month moratorium; 45 lakh units to benefit, she said, announcing parts of the economic package. For stressed MSMEs, the Government to facilitate the provision of ₹20,000 crores subordinate debt for equity support. 2 lakh MSMEs likely to benefit.

For MSMEs who may be doing viable business but need handholding because of the current situation, the govt announces ₹50,000 crore equity infusion via ‘fund of funds’. This will be operated through ‘mother fund’ and a few ‘daughter funds’. “The MSME definition has been revised. The investment limit will be revised,” Ms. Sitharaman said. The investment limit which defined an MSME has been revised upwards to Rs 1 crore as compared to Rs 25 lakh earlier.

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