MSMEs will get collateral free loans of upto Rs 100 Crore via New Credit Model : FM Sitharaman

BENGALURU : Union Finance Minister, Smt. Nirmala Sitharaman said at National MSME Cluster Outreach Programme here, that a new credit assessment model by public sector banks will be rolled out soon. This model will help the Ministry of Micro, Small and Medium Enterprises (MSMEs) get collateral-free loans of up to Rs 100 crore.

Speaking at the National MSME Cluster Outreach Programme in Bengaluru, the FM said that the problems faced by MSMEs would be solved after the latest credit guarantee scheme is launched. This scheme will be introduced in the cabinet soon, reported ANI.

The Finance Minister said, “The grievance, which has been for a very long time, is that MSMEs get working capital from banks, they don’t get term loans, loans for plant and machinery. Now, with this guarantee, which was announced in the budget, for up to 100 crores, the guarantee will be provided, even if you are going to borrow more from the banks, for the first 100 crores, the guarantee will be given. And therefore you are going there collateral-free to that extent.”

She explained that no third-party guarantee or collateral would be required for these loans. The authorities will give the MSMEs the guarantee for up to Rs 100 crore, the minister said. 

“Now we have announced in this budget that banks will do the credit assessment within themselves. Each bank will have their own credit assessment model,” Sitharaman noted.

The minister also said that e-commerce trade hubs are being established in partnership with private players which will help international trade and export-related services. She added that 20 industrial clusters would be covered with the opening of six new branches of Small Industries Development Bank of India (SIDBI).