Credit and Finance for MSMEs: Rs 10,000-crore Fund of Funds proposed by the MSME Ministry has been approved by the Finance Ministry and will be placed before the Cabinet soon for clearance.
Credit and Finance for MSMEs: MSME minister Nitin Gadkari on Wednesday said the Rs 10,000-crore Fund of Funds proposed by the MSME Ministry has been approved by the Finance Ministry and will be placed before the Cabinet soon for clearance. The minister urging MSMEs to list on stock exchanges for raising capital said that the government will buy 15 per cent of the amount raised as equity stake from the Fund of Funds. For instance, if the MSME raises Rs 50 crore, then Rs 7.5 crore in equity will be bought by the government. “This will be better than bank lending for growth,” he said in a webinar organised by the PHD Chamber.
The 15 per cent equity support will be provided to MSMEs with AAA credit rating going public while the fund will be controlled by the National Small Industries Corporation or another government organisation, PTI cited the minister as saying. The minister encouraged India Inc to also consider the financial condition of the government and banks while placing forth their demands, amid the coronavirus-induced economic crisis.
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Gadkari urged MSMEs to leverage the current crisis as an opportunity instead of a challenge to grow. “India should take the war against pandemic COVID-19 as a blessing in disguise and consider it as an opportunity to rise further,” PHD Chamber said in a statement citing the minister. The minister had on Tuesday asked the industry to benefit from the crisis to attract investment as “some countries are looking to move away from their investments from China, and India can be one of the best options for them,” he had told representatives from industry association FICCI.
The minister also announced the restructuring of additional 1 lakh MSMEs soon up from existing over 6 lakh restructured MSMEs till March 21, 2020. There are currently around 6 crore MSMEs in India contributing 48 per cent to India’s exports, 29 per cent to the country’s GDP and employing around 11 crore people, as per the latest government data.