GOI to launch credit guarantee scheme for MSMEs covering loans upto Rs 1 billion

  • Industry News
  • Jan 13,25
The government is also focusing on promoting rural entrepreneurship, with an emphasis on enhancing quality, building export linkages, capacity development, and achieving the vision of ‘Viksit Bharat’.
GOI to launch credit guarantee scheme for MSMEs covering loans upto Rs 1 billion

The Centre is set to introduce a new credit guarantee scheme for Micro, Small, and Medium Enterprises (MSMEs), enabling loans of up to Rs 1 billion without collateral. Announced in the Union Budget 2024-25 by Finance Minister Nirmala Sitharaman, the scheme aims to facilitate term loans for purchasing machinery and equipment, fostering growth in the MSME sector.

Financial Services Secretary M Nagaraju highlighted that the scheme, expected to be placed before the Union Cabinet for approval, will operate by pooling credit risks of MSMEs. A dedicated self-financing guarantee fund will provide guarantee cover up to Rs 1 billion for eligible borrowers. Applicants will be required to pay an upfront guarantee fee and an annual fee on the reducing loan balance.

The MSME sector plays a vital role in India's economy, employing over 50 million people and contributing significantly to GDP. Gross Value Added (GVA) from MSMEs rose from 29.7% in 2017-18 to 30.1% in 2022-23. Additionally, exports from MSMEs have seen a substantial increase, growing from Rs 3.95 trillion in 2020-21 to Rs 12.39 trillion in 2024-25, underscoring the sector's role in global trade.

The government is also focusing on promoting rural entrepreneurship, with an emphasis on enhancing quality, building export linkages, capacity development, and achieving the vision of ‘Viksit Bharat’. As India progresses, schemes like this aim to bolster the resilience and adaptability of MSMEs, driving economic growth and global competitiveness.
(New Indian Express)

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