FM Nirmala Sitharaman announces collateral-free automatic loans for MSMEs for 4-year-tenure

Image courtesy: ANI

New Delhi: Finance Minister Nirmala Sitharaman on Wednesday (May 13) announced several categories of collateral-free automatic loans for businesses, including MSMEs while elaborating on the Atmanirbhar Bharat Yojana announced by Prime Minister Narendra Modi on Tuesday.

The FM says that the economic package will be released in tranches and today's tranche will have 14 different measures. Of these, 6 are for MSMEs, 2 are for EPF, 2 for NBFCs and MFIs, 1 for discoms, 1 for contractors, 1 for real estate sector, and 3 tax measures.

Talking about the collateral-free loans to MSMEs, she said "This loan is for 4-year tenure and is 100 per cent guaranteed. This will last till October 21, 2020, and will benefit 45 lakh units, allowing them to resume activity and safeguarding jobs."

In a major initiative Government announces Rs 3 lakh crores Collateral-free Automatic Loans for Businesses, including MSMEs. #AatmanirbharBharat pic.twitter.com/jgnWeKYrWs

— PIB India #StayHome #StaySafe (@PIB_India) May 13, 2020

She said that Indian MSMEs and other companies have often faced unfair competition from foreign companies, therefore, global tenders will not be allowed in government procurement tenders up to Rs 200 crore, adding "Necessary amendments of General Financial Rules will be effected. This will be a step towards self-reliant India and support Make in India. This will also help MSMEs to increase their businesses." 

According to FM, the stressed MSMEs need equity support. The government will facilitate the provision of Rs 20,000 crore as subordinate debt, which will benefit 2 lakh MSMEs. Functioning MSMEs, which are NPA or are stressed will be eligible. The government will provide support of Rs 4,000 cr to CGTMSE.

The FM said "PM laid out a comprehensive vision, and that vision was laid out after wide consultations with several sections of the society,” she said, adding “Essentially this is to spur growth and to build a very self-reliant India and that is why this whole initiative is called Atmanirbhar Bharat Abhiyan.” 

“Atmanirbhar (self-reliant) India does not mean India is to be an isolationist country,” she added.

On Tuesday, PM Modi announced the 'Atmanirbhar Bharat Abhiyan' – an economic relief package worth Rs 20 lakh crore for a ‘self-reliant’ India, adding that the package, estimated to be around 10 percent of the GDP, is intended to help fight the COVID-19 pandemic.