India Business Journal - A new credit guarantee scheme for MSMEs set to be launched, says Sitharaman

INDUSTRY

A new credit guarantee scheme for MSMEs set to be launched, says Sitharaman

IBJ Bureau
Nov 11, 2024

Union Finance and Corporate Minister Nirmala Sitharaman has said that the Ministry of Micro, Small and Medium Enterprises (MSMEs) will get collateral-free loans of up to Rs 100 crore through a new credit assessment model by PSU banks.

Speaking at the National MSME Cluster Outreach Programme in Bengaluru, Ms Sitharaman has added that the grievances of MSMEs will be solved after the introduction of a new credit guarantee scheme which will be introduced in the Cabinet soon.

“The grievance, which has been for a very long time, is that MSMEs get working capital from banks, they don’t get term loans, loans for plant and machinery. Now, with this guarantee, which was announced in the Budget, for up to Rs 100 crore, the guarantee will be provided, even if you are going to borrow more from the banks, for the first Rs 100 crore, the guarantee will be given. And therefore, you are going there collateral-free to that extent,” she added.

Going further, the Ms Sitharaman said: “You don’t even need a third-party guarantee. No collateral, no third-party guarantee. The government gives you the guarantee for up to Rs 100 crore.”

She added that the banks will develop a new credit assessment model which will help the MSMEs. “Now, we have announced in this Budget that banks will do the credit assessment within themselves. Each bank will have its own credit assessment model,” she said explaining the benefit of the new assessment system.