BENGALURU: The Union Government will provide up to Rs 100 crore collateral-free loans to Micro, Small and Medium Enterprises (MSMEs) under a new special credit guarantee scheme, Union Finance Minister Nirmala Sitharaman announced, highlighting that the move is in response to long-standing challenges in securing funding, especially for term loans required for plant and machinery.
The FM also revealed plans for SIDBI (Small Industries Development Bank of India) to establish branches in every MSME cluster across the country within the next two to three years, with about 25 new branches coming up this year. “The expansion is to help reduce the cost of loans by eliminating intermediary lending through public sector banks,” she mentioned.
During the event, she inaugurated eight SIDBI branches virtually and visited Sai Ram Engineering, an MSME in Peenya Industrial Area which specialises manufacturing Down-The-Hole (DTH) hammers, hammer cases, and related components. “This initiative is designed to ensure that MSMEs do not need third-party guarantees or collateral to access these loans, making it easier for small businesses to expand and grow,” the minister said.
Sitharaman emphasised the government’s commitment to supporting every state and MSME, with particular focus on Karnataka, which has 35 lakh MSMEs contributing 1.65 crore jobs.
FM reviews RRBs
Nirmala Sitharaman also reviewed the performance of 10 Regional Rural Banks (RRBs) from the Southern Region in Bengaluru. The review covered RRBs in Karnataka, Tamil Nadu, Andhra Pradesh, Telangana, Kerala, and Puducherry.
The Union Minister also highlighted the crucial role of sponsor banks in providing technical support, sharing best practices, and ensuring that RRBs have the necessary resources for success.