NEW DELHI, Jan 9: Financial Services Secretary M Nagaraju announced on Thursday that the government is set to introduce a new credit guarantee scheme aimed at the MSME sector, which will cover loans up to Rs 100 crore.
“We are preparing to launch a scheme that was proposed by the Finance Minister in the recent Budget, allowing for loans of up to Rs 100 crore without a guarantee for existing enterprises,” he stated on the final day of the Grameen Bharat Mahotsav.
This scheme is expected to be presented to the Union Cabinet soon for its endorsement.
“To facilitate term loans for MSMEs for acquiring machinery and equipment without requiring collateral or a third-party guarantee, a credit guarantee scheme will be established. This scheme will function on the basis of pooling credit risks among such MSMEs. A specially created self-financing guarantee fund will offer guarantee coverage up to Rs 100 crore for each applicant, while the total loan amount can be larger,” Finance Minister Nirmala Sitharaman announced in the Budget for 2024-25.
According to her, borrowers will need to pay an upfront guarantee fee along with an annual guarantee fee based on the diminishing loan balance.
The Micro, Small and Medium Enterprises (MSMEs) sector currently employs 50 million individuals, he noted.
MSME exports have seen impressive growth, rising from Rs 3.95 lakh crore in 2020-21 to Rs 12.39 lakh crore in 2024-25, highlighting their vital contribution to enhancing India’s economy and reinforcing global trade.
The MSME sector in India has consistently exhibited remarkable resilience and adaptability, making significant contributions to the country’s GDP over the years. The Gross Value Added (GVA) from MSMEs accounts for 29.7 percent of India’s GDP in 2017-18, increasing to 30.1 percent in both 2022-23.
To foster entrepreneurship in rural India, Nagaraju emphasized the government’s commitment to increasing lending in rural areas through various initiatives.
As the nation progresses, he asserted the importance of concentrating on four key areas: quality, export linkages, capacity building, and support to realize the vision of Vikshit Bharat. (Agencies)
