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Multiple Sops for SMEs and MSMEs announced by PM Narendra Modi

PM Narendra Modi announced multiple sops for SMEs and MSMEs;

Prime Minister Narendra Modi in his New Year’s Eve address on December 31 announced sops for the SME and MSME sector.

  1. “To increase the employment that SMEs and MSMEs can provide, we are increasing the credit guarantee to Rs 2 crore from 1 crore,” PM Modi said.

 

  1. “Through a trust, the government will give banks guarantee to give credit to small enterprises. The entire Rs 2 crore will be covered by credit guarantee,” he said.

 

 

  1. “For small enterprises, cash credit limit will be increased from 20% to 35%. Small shopkeepers and small businessmen will get more credit at lower rates,” he said.
  2. “For digital transactions the working capital loan will increase from 20% to 30%,” he added.
MSME Loan Scheme Startup Scratch

PM Modi called the massive demonetisation drive of his government a historic “shuddhi yagana”. Lauding the 125 crore Indians who supported the decision and felt the pain, but were ready to sacrifice, PM Modi said, “After Diwali, after this announcement, we saw that everyone was determined to sacrifice and bear pain to defeat ill forces in the economy.” “Kuch baat hai ki hasti mitati nahi humaari – this is what the countrymen have proven,” PM Modi said.

 

Assuring people of better days ahead, PM Modi said that banks have been urged to focus on dealing with the problems that people are facing. “Banking people have been asked to ease the problems that people are facing, this is particularly for the rural areas, so that villagers and farmers don’t have to bear any more pain,” he said. PM Modi started his address by saying that the youth of India will welcome the New Year with new enthusiasm.

Which are considered as eligible lending institutions under the Scheme?

All Scheduled Commercial Banks (either PSU, Private or Foreign Banks), select Regional Rural Banks, or such of those institutions as may be directed by GOI can avail of guarantee cover in respect of their eligible credit facilities under the Scheme. Small Industries Development Bank of India (SIDBI), National Small Industries Corporation Ltd (NSIC) and North Eastern Development Finance Corporation Ltd (NEDFI) have been included as eligible institutions

MSME Loan Scheme Startup Scratch

 

Can a Private sector bank or a foreign bank be eligible for guarantee cover?

Yes, provided it is a commercial bank listed in the II Schedule to the Reserve Bank of India Act, 1934.

 

Is Regional Rural Bank eligible for guarantee cover?

Yes.  But only those Regional Rural Banks, which have been classified by NABARD under the ’Sustainable Viable’ category and currently viable category with positive net worth.

 

Whether SFCs, Twin Function IDCs, Scheduled Co-operative Banks, Urban Co-operative Banks and NBFCs are eligible lending institutions for availing guarantee cover under the CGTMSE?

Select SFCs are being considered for inclusion as MLI, other institutions are not eligible to become a MLI.

 

MSME Loan Scheme Startup Scratch

When can the eligible lending institutions apply for guarantee cover in respect of eligible credit facilities under the Scheme?

The eligible lending institutions are required to enter into an ‘one time’ agreement with CGTMSE for becoming Member Lending Institutions (MLIs) of the Trust. MLIs can then apply for guarantee cover in respect of eligible credit facility sanctioned to any eligible borrower.

Whether the Trust will re-appraise the proposals sanctioned by the MLIs for approving guarantee cover?

MLIs are expected to support only viable proposals using their commercial discretion and due diligence. CGTMSE will have full trust in their credit evaluation. The Trust will not re-evaluate the proposals sanctioned by MLIs.  If the proposals satisfy the basic norms laid down under the CGS, the Trust will extend guarantee cover.

 

MSME Loan Scheme Startup Scratch

What is the facility provided to an MLI desiring to know about the details of accounts covered under guarantee cover by CGTMSE?

MLI can log on to the website-member page, using member-ID allotted and generate the reports desired by it viz. status of the application lodged, Demand for GF/ASF, monthly reports etc.

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