Government approves Rs 3 lakh crore additional funding for MSMEs and MUDRA borrowers

New Delhi: The Union Cabinet on Wednesday gave approval for additional funding of as much as Rs 3 lakh crore to MSMEs and MUDRA borrowers by means of “Emergency Credit Line Guarantee Scheme.”

Under the Scheme, 100 % assure protection will probably be offered by National Credit Guarantee Trustee Company Limited (NCGTC) for additional funding of as much as Rs 3 lakh crore within the type of a Guaranteed Emergency Credit Line (GECL) facility.

A corpus of Rs 41,600 crore shall be offered by the federal government unfold over the present and the subsequent three monetary years. The Cabinet additionally permitted that the Scheme could be relevant to all loans sanctioned beneath GECL Facility throughout the interval from the date of announcement of the Scheme to October 31, 2020, or until an quantity of Rs 3,00,000 crore is sanctioned beneath the GECL, whichever is earlier.

The most important goal of the Scheme is to supply an incentive to Member Lending Institutions (MLIs), i.e., Banks, Financial Institutions (FIs) and Non-Banking Financial Companies (NBFCs) to extend entry to, and allow availability of additional funding facility to MSME borrowers, in view of the financial misery brought on by the COVID-19 disaster, by offering them 100 per cent assure for any losses suffered by them as a result of non-repayment of the GECL funding by borrowers, an official launch mentioned.

Finance Minister Nirmala Sitharaman asserting the primary tranche of the Rs 20 lakh crore Atmanirbhar Bharat Package anounced six measures are completely meant for the MSME sector together with the brand new definition of the sector.

Accordingly, the funding restrict for defining MSMEs has been revised upwards.

Prime Minister Narendra Modi had on May 5 introduced a cumulative bundle of Rs 20 lakh crore (practically 10 per cent of GDP) to supply reduction to varied segments of the financial system. This included Rs 1.7 lakh crore bundle comprising of free foodgrains and money to poor for three months introduced in March, and Rs 5.6 lakh crore stimulus offered by way of varied financial coverage measures by the Reserve Bank of India (RBI).

India has been beneath nationwide lockdown since March 25 to curb the unfold of the COVID-19 pandemic.

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