Govt set to guarantee up to Rs 3 lakh cr loans to MSMEs


NEW DELHI: The much-awaited stimulus by the government for micro, small and medium-sized companies is anticipated to embrace a provision for added loans of up to Rs 3 lakh crore or 20% of the financial institution publicity to the sector, together with a extra liberal dispensation for presidency contracts.
In addition, extra funding for Mudra loans, meant for tiny companies, are on the anvil, authorities sources informed TOI. The finance ministry has floated a proposal for the Union cupboard to guarantee recent working capital limits to small items by way of the National Credit Guarantee Trustee Company in order that small companies will not be starved of working capital.

Currently, financial institution publicity to over six crore micro, small and medium enterprises (MSMEs) is estimated at round Rs 15 lakh crore, authorities sources stated.

Bank loans insufficient to pay salaries, different dues
On Tuesday, the finance ministry stated that between March 20 and May 8, state-run lenders contacted 97% of debtors eligible for emergency credit score traces and dealing capital enhancements and sanctioned loans to the tune of Rs 65,879 crore.

But the funding is seen to be insufficient even to pay salaries and different dues provided that gross sales have come to a halt and funds are overdue from giant companies and authorities departments, one thing that might be pushed by the finance and MSME ministries as soon as once more.

Additional working capital is anticipated to assist banks lend extra to present funds to MSMEs amid expectations that the finance ministry will prod the Reserve Bank of India to prolong the mortgage moratorium past the present threemonth interval so that companies don’t come underneath strain to repay dues at a time when liquidity is already tight in absence of gross sales.

Apart from serving to them tide over the fast money crunch, an announcement on a brand new definition for MSME can also be anticipated to allow them to scale up. Besides, there are indications that authorities contracts up to a specified worth might be given to Indian companies. In addition, the obligatory procurement from micro and small companies is anticipated to be tightly monitored.

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