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Informist, Tuesday, Jul 23, 2024

 

AHMEDABAD – The Budget today announced a package for micro, small and medium enterprises, covering financing, regulatory changes and technology support to help companies grow and also compete globally.

 

Announcing the full Budget for 2024-25 (Apr-Mar), Finance Minister Nirmala Sitharaman said the government will introduce a credit guarantee scheme to facilitate term loans to MSMEs for the purchase of machinery and equipment without collateral. The scheme will operate on pooling of credit risks with a separately constituted self-financing guarantee fund providing guarantee cover up to 1 bln rupees, the minister said.

 

Sitharaman also announced a new mechanism for facilitating continuation of bank credit to MSMEs during their stress period with a government-promoted fund providing guarantees to MSMEs when their accounts are tagged as special mention accounts.

 

The minister also said public sector banks will build their in-house capability to assess MSMEs for credit, instead of relying on external assessment. State-owned banks will take the lead in developing a new credit assessment model, based on the scoring of digital footprints of MSMEs in the economy. This will be a significant improvement over the traditional assessment of credit eligibility based only on asset or turnover criteria, she said.

 

To facilitate MSMEs to unlock their working capital by converting their trade receivables into cash, the Budget proposed to reduce the turnover threshold of buyers for mandatory onboarding on the TReDS (Trade Receivables Discounting Syste) platform from 5 bln rupees to 2.5 bln rupees. This will bring 22 more public sector companies and 7,000 more companies onto the platform, she said. 

 

 

The minister also proposed to increase the limit of Mudra loans to 2 mln rupees from the current 1 mln rupees for those entrepreneurs who have availed and successfully repaid previous loans under the ‘Tarun’ category. 

 

The Small Industrial Development Bank of India will open new branches to spread its reach to serve all major clusters within the next three years. With the opening of 24 such branches this year, the service coverage will expand to 168 out of 242 major clusters, she said.

 

The government also announced financial support to set up 50 multi-product food irradiation units in the MSME sector. It will also facilitate setting up 100 food quality and safety testing laboratories.

 

To enable MSMEs and traditional artisans to sell their products in international markets, e-commerce export hubs will be set up in a public-private-partnership mode, the minister said.  End

 

Reported by Sunil Raghu

Edited by Saji George Titus

 

 

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