Union Cabinet to soon decide on Rs 100 CR credit guarantee scheme for MSMEs Finance Minister

Bengaluru, Nov 9 (PTI) Union Finance Minister Nirmala Sitharaman on Saturday said that the Rs 100 crore credit guarantee scheme for MSMEs which was announced in the budget this year will soon be placed before the Union Cabinet for approval.
    Highlighting the five announcements made in this budget for MSMEs she said, "the introduction of a special credit guarantee corpus to help MSMEs will be very helpful during the time of distress...."
    "The Rs 100 crore credit guarantee scheme will soon be placed before the cabinet. Immediately after getting approval from cabinet, the scheme that will provide guarantee through MSME ministry and banks will be implemented," the Union Finance Minister said, while attending the National MSME Cluster Outreach Programme here.


    "The grievance, which has been there for a very long time, is that the MSMEs can get working capital from banks but they don't get term loans, loans for plant and machinery. Now the guarantee will be provided under the scheme," she explained.

    Further stating that there is no need for a third party guarantee and collateral, Sitharaman said, "the Government gives you the guarantee power of Rs 100 crores, then public sector banks will develop a new credit assessment model."
    Lauding Karnataka for its contribution in the MSME sector, she said, the state has 35 lakh MSMEs, and they provide 1.65 crore employments.

    Highlighting the role of Small Industries Development Bank of India (SIDBI), the Finance Minister said, "the SIDBI understands small businesses. It can deal with MSMEs credit requirements and (provide) tailor made products for the credit requirement of MSMEs, and that is why SIDBI's presence in MSME clusters will do immense benefit for the MSMEs."
    "....within a matter of two to three years, SIDBI, will be present physically in every MSME cluster. Now they are expanding little by little. SIDBI will open 25 branches in clusters this year, but gradually they will be moving towards every cluster a SIDBI," she said .
    Earlier in the day, Sitharaman also chaired a meeting here to review performance of 10 Regional Rural Banks (RRBs)of the Southern Region, covering the five states of Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Telangana apart from the Union Territory of Puducherry.
    During the meeting, she urged RRBs to increase credit disbursement under various Government of India flagship schemes such as MUDRA, PM Vishwakarma, with the active support of their sponsor banks.

    According to an official statement, the meeting focused on business performance, upgrading digital technology services, and fostering business growth in activities allied to agriculture and micro and small industry


    The Union Minister also directed RRBs to increase their share in ground level agriculture credit disbursement with special focus on allied agriculture activities like dairy, animal husbandry, fisheries etc, and to take necessary steps to realise the full potential of allied agriculture activities in the region.


    "RRBs and sponsor banks were specially directed to work with respective state government departments to increase credit disbursement to fisheries sector in Kerala and dairying sector in Telangana," it stated.


    Specific emphasis was placed on reinforcing credit support to MSMEs and streamlining customer onboarding processes through digital innovations.


    "Sitharaman also stated that all RRBs should devise a strategy for MSME credit with customised products aligning with cluster activities and conduct special outreach programmes with convergence and awareness regarding the various Government of India schemes. She said that the RRBs should explore to leverage digital platforms of SIDBI and seek MSME refinance from it," the statement added.

(This story has not been edited by THE WEEK and is auto-generated from PTI)