Union Finance Minister Nirmala Sitharaman announced on Saturday that the Centre is all set to provide up to Rs 100 crore collateral-free loans to Micro, Small and Medium Enterprises (MSMEs) under a new special credit guarantee scheme.
Speaking at the National MSME Cluster Programme organised jointly by the Department of Financial Services (DFS) and Small Industries Development Bank of India (SIDBI) she said that the move is in response to long-standing challenges in securing funding, especially for term loans required for plant and machinery.
The FM announced plans for SIDBI to establish branches in every MSME cluster across the country within the next two to three years. Twenty five new branches are expected to come up this year. “The expansion is to help reduce the cost of loans by eliminating intermediary lending through public sector banks,” she stated.
In a boost to MSMEs, SIDBI signed a Memorandum of Understanding (MoU) with the Peenya Industries Association. The collaboration aims to provide MSMEs with access to enhanced capacity-building opportunities, credit facilities, and knowledge-sharing resources, contributing to the sector’s sustainability and growth.
In her speech, the finance minister highlighted the crucial role MSMEs play in India’s economic development, stressing on their significance in driving innovation, creating jobs, and contributing to the nation’s self-reliance. She also emphasised the government’s commitment in supporting this vital sector.
Also Read: Top 15+ MSME Schemes to Empower Small Business India 2024
Sitharaman focussed on the government’s commitment to supporting every state and MSME, with particular focus on Karnataka, which has 35 lakh MSMEs contributing 1.65 crore jobs.
Sitharaman also set an ambitious target for the MSME credit sector, urging all Scheduled Commercial Banks and Non-Banking Financial Companies (NBFCs) to provide an additional Rs 1.54 lakh crore in MSME credit during FY 2024-25. The broader target is for these institutions to drive credit growth of Rs 5.75 lakh crore in FY 2024-25, Rs 6.21 lakh crore in FY 2025-26, and Rs 7 lakh crore in FY 2026-27.
Additionally, Sitharaman distributed sanction letters to 11 MSME customers of SIDBI, totalling Rs. 25.75 crore. The loans, which cover a range of industries, will extend support to traditional industries and cutting-edge fields such as aerospace and quantum technology. The FM also handed out two sanction letters to MSME customers of Nari Shakti Branch of Union Bank of India totalling Rs11 crore.
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The National MSME Cluster Outreach Programme, together with the new financial support initiatives and the increase in loan limits, is a step toward MSME empowerment that will boost economic growth, and strengthen the entrepreneurial spirit in the country.
