Fund of Funds for MSMEs: Govt’s Rs 50,000 crore equity infusion to benefit this many small businesses

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Published: May 14, 2020 8:04:39 PM

Credit and Finance for MSMEs: The Fund of Funds will help MSMEs with “growth potential and viability” even as they “face severe shortage of equity,” Nirmala Sitharaman said announcing the Covid-relief package for MSMEs.

Economic package,nitin gadkari, indian economy, world economy, MSME sector, covid 19, latest news on nitin gadkariMSME Minister Nitin Gadkari aimed at increasing the turnover of the village industry to Rs 5 lakh crore in the next two years.

Credit and Finance for MSMEs: The Fund of Funds announced by the Finance Minister Nirmala Sitharaman on Wednesday to infuse Rs 50,000 equity in MSMEs will cater to more than 25 lakh MSMEs, according to MSME Minister Nitin Gadkari. Set-up with a corpus of Rs 10,000 crore, the Fund of Funds “will benefit over 25 lakh MSMEs under stress,” a statement by the MSME Ministry cited Gadkari as saying in a video message. The fund will help MSMEs with “growth potential and viability” even as they “face severe shortage of equity,” Nirmala Sitharaman had said. Moreover, the fund will be operated through a Mother Fund and a few daughter funds to enable MSMEs expand in size and capacity and would also encourage them to list on the main board of the stock exchanges.

Gadkari also hoped that with the easing of the global tendering norm MSMEs will be able to get orders from defence and police departments for uniforms etc. Sitharaman in the relief measures for MSMEs had disallowed global tenders up to Rs 200 crore for MSMEs to compete better against foreign companies for government procurement tenders.

Also read: Small businesses welcome govt’s 2% interest subvention for Mudra loans but say repayment still tough

The MSME Ministry has been aiming at increasing the turnover of the village industry from around Rs 88 thousand crore to Rs 5 lakh crore in next two years. Gadkari said the financial package for MSMEs will “help achieve this target in a big way. The Khadi sector will play a big role in this as it is entering into exports also.”

Meanwhile, under the second leg of the stimulus package announced by Sitharaman on Thursday, a 2 per cent interest subvention on loans up to Rs 50,000 secured by small businesses under the Mudra scheme’s Shishu cover was announced. The interest subvention will be offered to prompt payees making regular payments for 12 months. The total relief amount — under the subvention to Shishu loanees making regular payments — will be Rs 1,500 crore.

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