Giving details about PM Modi’s announced “Atmanirbhar Bharat Abhiyan” package worth Rs 20 lakh crores to restart the economy following the coronavirus induced lockdown, the Finance Minister Nirmala Sitharaman has announced a slew of measures to be taken by the government to alleviate the financial concerns faced by the MSME sector.
Finance Minister Nirmala Sitharaman announced that MSMEs will get collateral-free loans for MSME up to Rs 3 lakh crores with 4 years tenor. 100 per cent of the credit guarantee will be provided by the government to the banks and NBFCs on principal and interest. The scheme can be availed by the MSMEs till October 31, 2020. She said that this will enable 45 lakh MSME units to resume business and safeguard jobs.
Sitharaman further added that for the stressed MSMEs, Rs 20,000 crore liquidity will be earmarked by the government to benefit around 2 lakh MSMEs. Stressed and NPA MSMEs will be eligible for this facility. The government will provide a cover of Rs 4000 crore to CGTMSE which in turn will extend partial credit guarantee support to the banks.
Furthermore, the finance minister also declared that the capital of Rs 50,000 crores will be infused in MSMEs for their expansion through Fund of Funds and will be operated through a mother fund and few daughter funds. She added that this move will bolster MSMEs and help them in their size and capacity expansion. This measure will help MSMEs to get listed on the main board of Stock Exchanges, Ms Sitharaman asserted.
Rs 50,000 cr. Equity infusion for MSMEs through Fund of Funds; to be operated through a Mother Fund and few daughter funds; this will help to expand MSME size as well as capacity. #AtmaNirbharBharatAbhiyan #atmanirbharbharat pic.twitter.com/Y5FMC4TouI— PIB India #StayHome #StaySafe (@PIB_India) May 13, 2020
Besides, MSME gets a revision and the investment limit has been revised upwards and additional criteria of turnover is also being introduced. Manufacturing and Services sectors which were hitherto differentiated have been clubbed as per the revised definition.
As per the new definition, MSMEs with the investment and turnover less than Rs 1 crore and Rs 5 crores respectively will be categorised under Micro MSMEs. Small MSMEs will have the investment and turnover threshold of Rs 10 crores and Rs 50 crores respectively and the Medium MSMEs will have investment and turnover limit of Rs 20 crores and Rs 100 crores respectively.