PM Modi’s Rs 3 lakh crore MSME loan scheme sanctioned this much amount in just one day

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June 2, 2020 1:58 PM

Credit and Finance for MSMEs: Rs 3 lakh crore collateral-free loan scheme for Covid-hit MSMEs was approved by the cabinet, chaired by PM Modi, last month.

Cabinet decisions, indian economy, PM SVANidhi, Prakash Javadekar, MSMEs, employment opportunities, Modi 2.0 governmentCredit extended to businesses, under the scheme, will have four-year tenor with a moratorium of 12 months on principal repayment.

Credit and Finance for MSMEs: Public sector banks have sanctioned loans worth Rs 3,200 crore in a single day through the Rs 3 lakh crore collateral-free loan scheme for MSMEs, according to Finance Minister Nirmala Sitharaman. “On a single day 1 June ‘20, #PSBs have sanctioned collateral-free loans worth Rs 3,200 crore through the Emergency Credit Line Guarantee Scheme,” the minister’s office tweeted on Monday. The scheme was approved by the cabinet, chaired by PM Modi, last month. “Businesses/MSMEs have been badly hit due to Covid-19 (and) need additional funding to meet operational liabilities built up, buy raw material and restart business,” Sitharaman had said while announcing the Rs 20 lakh crore economic package.

Moreover, MSMEs based in over 3,000 Tier-II towns “were covered in one day” under the loan scheme that will “enable them to pay salaries, rent, and restocking expenses,” another tweet said. MSMEs with up to Rs 25 crore outstanding and Rs 100 crore turnover can apply for the emergency credit from banks and NBFCs up to 20 per cent of entire outstanding credit as on February 29, 2020.

Also read: Modi reassures MSMEs of growth with revised definition; says businesses can grow ‘without any worries’

“The roll-out of collateral-free loans worth Rs. 3 lakh crore for MSMEs will help to infuse much-needed liquidity in the sector and help these units address their cash flow problems. This move will prove crucial for MSMEs to kickstart business activities and provide job protection to employees,” said Mahesh Singhi, Founder and MD, Singhi Advisors. Credit extended to businesses, under the scheme, will have four-year tenor with a moratorium of 12 months on principal repayment. Banks and NBFCs are provided with 100 per cent credit guarantee on the principal and interest amount. MSMEs can avail the scheme till October 31, 2020. Sitharaman had said that 45 lakh MSME units will be able to resume business activities and safeguard jobs with the scheme.

However, a section of the small businesses had recently raised concern around banks still being reluctant to lend. In a video conference with MSME Minister Nitin Gadkari last week, the members of the Calcutta Chamber of Commerce last week had said that “Despite government giving sovereign guarantee (under Rs 3 lakh crore loan scheme), bankers are not coming forward.” The minister, however, had asked them to send him their grievances if in raising loan from banks for the government to follow up and resolve the credit crisis.

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