Finance Minister Nirmala Sitharaman | Photo: Suraj Singh Bisht | ThePrint
Finance Minister Nirmala Sitharaman | Photo: Suraj Singh Bisht | ThePrint
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New Delhi: The government has expanded its loan guarantee scheme for micro, small and medium enterprises to include loans given to professionals like doctors, lawyers and chartered accountants for business purposes as well as to firms with a turnover of Rs 250 crore.

The Rs 3-lakh crore loan guarantee scheme was announced as part of the government’s Atma Nirbhar package to provide liquidity support to such firms. Under the scheme, the government provides full loan guarantee to the incremental loans given to borrowers.

So far, banks have approved loans amounting to Rs 1.37 lakh crore to 40 lakh MSME units under the scheme and disbursed around Rs 88,000 crore.

It is expected that around Rs 1 lakh crore could be sanctioned to the additional beneficiaries, said Finance Minister Nirmala Sitharaman at a press briefing Saturday. 

Debasish Panda, Secretary, Department of Financial Services, said the changes to the scheme were taken after consultation with stakeholders and taking into account the remaining headroom under the window.

Both, however, clarified that the loan guarantee will be within the Rs 3-lakh crore cap. 


Also read: Modi govt estimates 15% of Rs 3 lakh crore MSME loans could turn NPA. Banks fear worse

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Annual turnover eligibility has been increased

According to the new terms, borrower accounts with loans outstanding of upto Rs 50 crore as on 29 February will be eligible for a loan guarantee on their additional borrowings of upto 20 per cent of their outstanding amount. The earlier limit was Rs 25 crore.

Similarly, the annual turnover eligibility has been increased to Rs 250 crore from Rs 100 crore.

These changes mean that the maximum loan amount a unit can avail with the guarantee will be Rs 10 crore as against Rs 5 crore before.

Panda also expressed hope that the government’s other scheme for stressed MSMEs will take off from Monday with all approvals in place.

The Rs 20,000-crore fund for stressed MSMEs had received cabinet approval in June, but took some time to be operationalised.

Panda also said that nearly Rs 18,000 crore of support to non-banking finance companies (NBFCs) has been approved under the government’s special liquidity window of Rs 45,000 crore for NBFCs and housing finance companies, but did not specify what percentage of the loans went to firms with lower credit ratings.

So far, the larger and higher rated NBFCs have benefitted from most of the government’s relief packages.


Also read: Modi govt’s Rs 20 lakh crore package is a missed opportunity for MSME credit reform


 

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