Credit guarantee to MSEs to double to over Rs 40,000 cr this fiscal under CGTMSE

New Delhi, June 26 (KNN) Acknowledging that the MSME sector requires timely and low cost credit, MSME Secretary AK Panda said credit guarantee to the micro and small enterprises (MSEs) sector will double to over Rs 40,000 crore this fiscal under the Credit Guarantee Fund Trust for MSE.

He was speaking at a press conference to announce the celebration of UN SME Day on June 27.

On credit flow from the banks, he said the government is making efforts to reach out to other lenders such as non-banking financial companies (NBFCs) to enhance credit flow to the sector.

The government will also explore ways to utilise non-budgetary instruments, Panda said, adding that the growth rate of non-performing assets (NPAs) in the micro and small sector is much lower than the other sectors.

"During 2018-19, we are estimating the credit guarantee would definitely cross Rs 40,000 crore. We will try to touch around Rs 50,000 crore. Considering that Rs 40,000 crore will be 75 per cent of the total lending, if that is the case the overall credit in the MSE sector will be Rs 50,000-55,000 crore," he said.

He pointed that under the Credit Guarantee Fund Trust for micro and small enterprises (CGTMSE), there was a credit guarantee of almost Rs 19,000-20,000 crore in the last 2-3 years.

Panda said the government has introduced some structural reforms and is allowing NBFCs also to lend, besides enhancing the credit guarantee percentage from 50 per cent to 75 per cent.

On GST refunds to exporters from the MSME sector, he said "things have definitely improved" after the finance ministry processed refunds due to exporters.

Further, Panda said, "If in the first instance, the entrepreneur has already repaid the loan and more loan assistance is required, we are going to provide a second dose of loan up to Rs 1 crore with a maximum capped subsidy of Rs 15 lakh," Panda said, adding that this will act as a huge incentive for those setting up new units.

The Cabinet had cleared continuation of PMEGP with an outlay of Rs 5,500 crore entailing a modification made in the scheme to include a second loan of up to Rs 1 crore to existing and better performing PMEGP units for upgrading with subsidy of 15 per cent.