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‘Fund of Funds’ worth Rs 10,000 crore being created for MSMEs to battle Coronavirus pandemic

The MSMEs contribute 29 percent of India's GDP and 49 percent of export and offer 11 crore employments

Union Minister Nitin Gadkari said on Friday that the government will soon approve a fund of 10,000 crore rupees for micro, small and medium enterprises (MSMEs) with high credit rating if they raise money from capital markets.

He said while addressing the participants at a Webinar organized by The Young President’s Organization, “We are releasing Rs 10,000 ‘Fund of funds’ for the good units of SMEs, which export and have a good turnover in banks.”

The MSME Minister informed that the proposal of Rs 10000 crore ‘Fund of Funds’ has been cleared by the central govt and soon will be sent to Union Cabinet for final approval. A separate scheme is being formulated for credit ratings of MSMEs which is mainly based on their annual turnover, exports and GST payments.

Gadkari said that the government wants the fund’s corpus to be utilised by the MSMEs with AAA rating. AAA rating implies high creditworthiness. Upto 15 percent of the amount a AAA-rated MSME raises from the capital market will be contributed by the government through the fund as equity.

As an example, “If you raise 50 Crores, the government will put in 15 percent,” said Gadkari.

Read- RBI Governor announces new measures to ease financial distress amidst coronavirus lockdown

The MSMEs contribute 29 percent of India’s GDP and 49 percent of export and offer 11 crore employments. As per reports, the government has restructured about six lakh MSMEs.

Gadkari assured all the possible help from the government to tide over the challenges created by the lockdown due to coronavirus outbreak. The minister said that the deadline is being extended from March 31 to December 31 so that the number can go up to 15 lacs.

However, he also added that government if facing financial crisis. “Some state do not have money pay salaries to staff next month. The situation of banks is also challenging in terms of their survival” ,said the minister.

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OpIndia Staffhttps://www.opindia.com
Staff reporter at OpIndia

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