The Government of India is set to introduce a new credit guarantee scheme for Micro, Small, and Medium Enterprises (MSMEs), aimed at facilitating collateral-free loans of up to Rs 100 crore. Announced during the 2024-25 Budget by Finance Minister Nirmala Sitharaman, this scheme is designed to support MSMEs in acquiring machinery and equipment without the need for third-party guarantees.
Financial Services Secretary M Nagaraju confirmed that the scheme would be based on pooling credit risks, supported by a self-financing guarantee fund offering coverage up to Rs 100 crore for each applicant. While the loan amount may exceed this limit, borrowers would be required to pay an upfront guarantee fee and an annual fee on the reducing loan balance.
This initiative is seen as a significant step to strengthen the MSME sector, which is crucial for India's economy, employing 50 million people and contributing to substantial export growth. The sector’s contribution to India’s GDP has grown steadily, and with the new credit scheme, the government aims to further empower MSMEs to drive economic progress. The proposal is expected to be presented before the Union Cabinet for approval soon.
The scheme is also expected to promote entrepreneurship in rural areas, with a focus on four key aspects: quality, export linkages, capacity building, and support. By addressing these areas, the government envisions the growth of a strong MSME sector, which will be pivotal in India’s vision of achieving a "Vikshit Bharat" (developed India).
Comments