Credit guarantee extended to larger firms, self-employed

Credit guarantee extended to larger firms, self-employed
Finance Minister Nirmala Sitharaman addresses FICCI members on July 31, 2020. Photo: Twitter/@ficci_india

Finance Minister Nirmala Sitharaman addresses FICCI members on July 31, 2020. Photo: Twitter/@ficci_india
 


Scheme with ₹41,600 crore corpus was to help MSMEs.

The Centre has expanded its credit guarantee scheme for micro, small and medium enterprises (MSMEs) to cover loans given to larger firms, as well as to self-employed people and professionals who have taken loans for business purposes, Finance Minister Nirmala Sitharaman said on Saturday.

The Emergency Credit Line Guarantee Scheme was rolled out in May as part of the Centre’s Aatmanirbhar package in response to the COVID-19 crisis. It has a corpus of ₹41,600 crore and provides fully guaranteed additional funding of up to ₹3 lakh crore. Eligible MSMEs had to have an annual turnover up to ₹100 crore, with outstanding loans of up to ₹25 crore as on February 29, 2020.

Also read | Centre working with RBI on need for loan restructuring: Nirmala Sitharaman

₹87,000 crore disbursed

So far, banks have approved ₹1.36 lakh crore worth of loans to 40 lakh MSME units under the scheme. Over ₹87,000 crore had already been disbursed, Financial Services Secretary Debashis Panda told journalists.

“Given that there was further headroom available, it was decided to expand the scheme. We expect that ₹1 lakh crore can be sanctioned to additional beneficiaries due to the expansion,” said Ms. Sitharaman, adding that the window would remain open for the original MSME beneficiaries as well.

The scheme has been expanded to cover enterprises with a turnover up to ₹250 crore, with outstanding loans up to ₹50 crore. Individual beneficiaries include both professionals such as doctors, lawyers and chartered accountants, as well as self-employed people such as vendors or taxi drivers.

The government had received feedback especially from non-banking financial companies that a large section of their clientele included such people, who had taken loans under their own names for business needs.

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