Government relief for MSMEs: Change in definition, repayment of dues, collateral free loans announced

NEW DELHI: Finance Minister Nirmala Sitharaman on Wednesday announced a slew of measures to rescue the ailing micro, small, and medium enterprises (MSMEs) in the nation, together with collateral-free loans as much as Rs three lakh crore backed by authorities assure, repayment of MSME dues throughout the subsequent 45 days, change in definition of these companies amongst others.
For the emergency credit score line to companies and MSMEs from banks and NBFCs as much as 20% of complete excellent credit score as on 29.2.2020, and debtors with as much as Rs. 25 crore excellent and Rs. 100 crore turnover can be eligible. The loans can have a four-year tenor with moratorium of 12 months on the principal repayment.

Addressing a press convention to expound on the Rs 20 lakh crore stimulus announced by Prime Minister Narendra Modi on Tuesday, Finance Minister Nirmala Sitharaman announced a Fund of Funds with Corpus of Rs 10,000 crores to be arrange which is able to present fairness funding for MSMEs with progress potential and viability.

Meeting a long-pending demand of the MSME sector, Sithraman announced a change in definition of MSMEs, bringing in a further standards associated to turnover.

“Distinction between manufacturing and service MSMEs are being removed. They shall all be defined similarly,”Sitharaman mentioned.

Both manufacturing and companies companies with funding as much as Rs 1 crore and turnover of Rs 5 crore can be categorized as small, funding of as much as Rs 10 crore and turnover of as much as Rs 50 crore can be micro, whereas companies with an funding of as much as Rs 20 crore and turnover of Rs 100 crore can be categorized as Medium enterprises, as per the revised definition.

“MSME receivables from authorities of Indian and CPSEs can be launched in 45 days, Sitharaman mentioned.

The authorities will facilitate provision of Rs. 20,000 cr as subordinate debt, of which two lakh confused MSMEs are prone to profit, Sitharaman mentioned. Sitharaman additionally mentioned that international tenders can be disallowed in authorities procurement tenders upto Rs 200 crores, to assist MSMEs give a stage enjoying subject.

“Majority of MSMEs were unable to supply (to these tenders), because the conditions became unmatchable for MSMEs,” Sitharaman mentioned. Sitharaman additionally referred to as for e-market linkage for MSMEs to be promoted to behave as a substitute for commerce festivals and exhibitions.

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