Govt Enhances Credit & Equity Support To Strengthen MSME Finance Ecosystem

New Delhi, Dec 5 (KNN) The Government has introduced a series of initiatives aimed at strengthening access to finance for Micro, Small and Medium Enterprises (MSMEs), with recent measures focusing on expanding credit guarantees, enhancing subsidy support and facilitating equity infusion.

In a written reply to a question in the Lok Sabha on December 4, Minister of State for Micro, Small and Medium Enterprises Sushri Shobha Karandlaje highlighted the steps taken to bolster financial support for the sector. 

A key reform includes the enhancement of the Credit Guarantee Trust Fund for Micro and Small Enterprises (CGTMSE) ceiling from Rs 5 crore to Rs 10 crore. 

Established jointly by the Ministry of MSME and SIDBI in 2000, the CGTMSE provides credit guarantees for loans extended to micro and small enterprises without requiring collateral or third-party guarantees.

Under the Prime Minister’s Employment Generation Programme (PMEGP), margin money subsidies of up to 35 per cent continue to be offered to promote the establishment of new micro-enterprises in the non-farm sector. 

The scheme supports projects with costs up to Rs 50 lakh for manufacturing units and Rs 20 lakh for services.

To further empower traditional artisans and craftspeople engaged in 18 trades, the Government launched the PM Vishwakarma scheme in September 2023. 

The initiative offers end-to-end support, including loans of up to Rs 3 lakh with an interest subvention of up to 8 per cent.

The Government has also operationalised the Self Reliant India (SRI) Fund, designed to infuse Rs 50,000 crore as equity funding into MSMEs. Of this, Rs 10,000 crore is contributed by the Government, while the remaining Rs 40,000 crore is mobilised through private equity and venture capital funds.

Additional measures to enhance credit access include the provision of collateral-free loans for micro and small enterprises, the implementation of the Trade Receivables Discounting System (TReDS), the introduction of a Mutual Credit Guarantee Scheme for projects requiring loans up to Rs 100 crore, and the reduction of turnaround times for bank credit decisions. 

These initiatives form part of the Government’s ongoing stakeholder consultations aimed at strengthening MSME growth, competitiveness and resilience.

(KNN Bureau)