NEW DELHI: Financial Services Secretary M Nagaraju on Thursday said the government would soon launch a new credit guarantee scheme for the MSME sector covering loans up to Rs 100 crore.
"We are likely to come up with a scheme, which was announced by Finance Minister in her last Budget, that could provide loans up to Rs 100 crore without guarantee, if they are already having the enterprise," he said at the concluding day of Grameen Bharat Mahotsav.
The scheme is expected to be placed before the Union Cabinet soon for its approval.
"For facilitating term loans to MSMEs for purchase of machinery and equipment without collateral or third-party guarantee, a credit guarantee scheme will be introduced. The scheme will operate on pooling of credit risks of such MSMEs. A separately constituted self-financing guarantee fund will provide, to each applicant, guarantee cover up to Rs 100 crore, while the loan amount may be larger," the Finance Minister Nirmala Sitharaman had announced in Budget 2024-25.
The borrower will have to provide an upfront guarantee fee and an annual guarantee fee on the reducing loan balance, she had said.
Micro, Small and Medium Enterprises (MSMEs) sector employs 50 million people, he said.
MSMEs exports have witnessed a remarkable rise, increasing from Rs 3.95 lakh crore in 2020-21 to Rs 12.39 lakh crore in 2024-25, underscoring their critical role in boosting India's economy and strengthening global trade.
The MSME sector in India has consistently demonstrated remarkable resilience and adaptability, significantly contributing to the nation's GDP over the years.
The Gross Value Added (GVA) by MSMEs in India's GDP was 29.7 percent in 2017-18, rising to 30.1 percent in both 2022-23.
To promote entrepreneurship in rural India, Nagaraju said, the government is very keen to lend more to rural areas through its various schemes.
As the country surges ahead, he said, there is need to focus on four things, quality, linkages for exports, capacity building, and support to achieve the vision of Vikshit Bharat.