Govt to Soon Approve Rs 100 Crore MSME Credit Guarantee Scheme: FM
Union Finance Minister Nirmala Sitharaman announced that the Rs 100 crore credit guarantee scheme for Micro, Small, and Medium Enterprises (MSMEs), introduced in this year’s budget, will soon be presented to the Union Cabinet for approval.
Addressing the National MSME Cluster Outreach Programme, Sitharaman emphasized the scheme’s potential to support MSMEs during challenging times.
No Third-Party Collateral Needed
The scheme aims to provide a dedicated credit guarantee to MSMEs without requiring third-party guarantees or collateral. “The Rs 100 crore credit guarantee will soon go to the Cabinet for approval. Once passed, it will be implemented through the MSME ministry and banks,” Sitharaman explained. She highlighted that the scheme will enable public sector banks to adopt a new credit assessment model, ensuring that MSMEs gain easier access to term loans for plant and machinery—an area often overlooked by traditional bank loans.
Karnataka’s Key Role and SIDBI Expansion in MSME Clusters
Recognizing Karnataka’s substantial contribution to the MSME sector, Sitharaman noted that the state houses 35 lakh MSMEs, which generate employment for around 1.65 crore people. She also lauded the role of the Small Industries Development Bank of India (SIDBI) in catering to MSMEs’ unique credit requirements. “SIDBI understands small businesses and offers tailored credit solutions. Its expansion within MSME clusters will benefit the sector immensely,” she said, adding that SIDBI will establish 25 new branches in MSME clusters this year, with plans to eventually cover all clusters.
Review of Regional Rural Banks (RRBs) in Southern India
Earlier in the day, Sitharaman chaired a review meeting of 10 Regional Rural Banks (RRBs) from southern states including Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, and Telangana, as well as Puducherry. The meeting aimed to assess the performance of RRBs and explore how they can further support the growth of MSMEs in the region.
This MSME-focused credit guarantee scheme is anticipated to bolster the financial resilience of small enterprises across India, providing a crucial boost to economic growth and employment.
