Union Finance Minister Nirmala Sitharaman said on Saturday that the ₹100 crore loan guarantee scheme announced in this year's budget for Micro, Small, and Medium Enterprises (MSMEs) will soon be presented to the Union Cabinet for approval.
Highlighting the five announcements made in the budget for MSMEs, she mentioned, "The introduction of a special loan guarantee fund for MSMEs will be very helpful during times of crisis."
In the National MSME Cluster Outreach Program, Union Finance Minister Nirmala Sitharaman stated that the ₹100 crore loan guarantee scheme will soon be presented before the Cabinet.
Once approved by the Cabinet, the scheme will be implemented through the Ministry of MSME and banks to provide guarantees.
She said, "For a long time, there has been a complaint that MSMEs get working capital from banks, but they don’t receive loans for fixed terms or for plant and machinery. Under this scheme, a guarantee will be provided."
Nirmala Sitharaman mentioned that there is no need for a third-party guarantee, adding, "The government will provide you with a ₹100 crore guarantee power, after which public sector banks will develop a new credit assessment model."
Appreciating Karnataka’s contribution to the MSME sector, she noted that the state has 3.5 million MSMEs that provide 16.5 million jobs.
Regarding the Small Industries Development Bank of India (SIDBI), the Finance Minister said that SIDBI understands small businesses and can meet the loan requirements of MSMEs. "That’s why SIDBI’s presence in the MSME clusters will be very beneficial for MSMEs."
Earlier, Sitharaman chaired a meeting to review the performance of 10 regional rural banks (RRBs) from the southern region, which included five states—Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, and Telangana, as well as the Union Territory of Puducherry.
During the meeting, she urged the regional rural banks to increase loan distribution under various key government schemes such as MUDRA and PM Vishwakarma, in collaboration with their sponsor banks.
