CII wants more MSMEs to tap into Rs 3 lakh crore credit scheme; may urge govt to make this key move

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Updated: Jun 28, 2020 11:40 AM

The government has pledged full guarantee for up to 20% additional, collateral-free working capital loans under the ECLGS. However, only borrowers with up to Rs 25 crore outstanding as of February 29 and Rs 100 crore annual turnover will be eligible.

The CII chief says India Inc must shun excessive obsession with short-term growth pangs and look at raising capital to tide over the pandemic and reap medium-term gains.CII President Uday Kotak said the industry body could represent to the government to relax the turnover and investment limits of MSMEs.

CII President Uday Kotak on Saturday said the industry body could represent to the government to relax the turnover and investment limits of MSMEs in sync with the revised definition to enable a much wider pool of businesses to tap the 3-lakh-crore Emergency Credit Line Guarantee Scheme (ECLGS).

Kotak, who is also the managing director of Kotak Mahindra bank, said MSMEs must not just rely on conventional sources of funding, such as banks and shadow lenders, but also tap venture capital and angel investors to bolster their equity base to tide over the damaging impact of the pandemic.

The government has pledged full guarantee for up to 20% additional, collateral free working capital loans under the ECLGS. However, only borrowers with up to Rs 25 crore outstanding as of February 29 and Rs 100 crore annual turnover will be eligible.

The government on Friday notified a decision to raise the annual turnover limit for a medium enterprise to Rs 250 crore from Rs 100 crore. Similarly, the investment limit to qualify as a medium enterprise has been raised to Rs 50 crore from Rs 20 crore,announced as part of the Rs 21-lakh-crore relief package in May.

The latest definition will come into effect from July 1. “It’s a fair point, and the CII would certainly consider raising it before the government,”Kotak said at a CII webinar, in response to a demand for implementing the revised MSME criteria.

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