Government approves Rs 3 lakh crore additional funding for MSMEs and MUDRA borrowers
New Delhi: The Union Cabinet on Wednesday gave approval for extra funding of as much as Rs Three lakh crore to MSMEs and MUDRA debtors by means of “Emergency Credit Line Guarantee Scheme.”
Under the Scheme, 100 p.c assure protection will probably be offered by National Credit Guarantee Trustee Company Limited (NCGTC) for extra funding of as much as Rs Three lakh crore within the type of a Guaranteed Emergency Credit Line (GECL) facility.
A corpus of Rs 41,600 crore shall be offered by the federal government unfold over the present and the subsequent three monetary years. The Cabinet additionally authorised that the Scheme can be relevant to all loans sanctioned beneath GECL Facility through the interval from the date of announcement of the Scheme to October 31, 2020, or until an quantity of Rs 3,00,000 crore is sanctioned beneath the GECL, whichever is earlier.
The predominant goal of the Scheme is to offer an incentive to Member Lending Institutions (MLIs), i.e., Banks, Financial Institutions (FIs) and Non-Banking Financial Companies (NBFCs) to extend entry to, and allow availability of extra funding facility to MSME debtors, in view of the financial misery brought on by the COVID-19 disaster, by offering them 100 per cent assure for any losses suffered by them resulting from non-repayment of the GECL funding by debtors, an official launch stated.
Finance Minister Nirmala Sitharaman asserting the primary tranche of the Rs 20 lakh crore Atmanirbhar Bharat Package anounced six measures are solely meant for the MSME sector together with the brand new definition of the sector.
Accordingly, the funding restrict for outlining MSMEs has been revised upwards.
Prime Minister Narendra Modi had on May 5 introduced a cumulative package deal of Rs 20 lakh crore (almost 10 per cent of GDP) to offer reduction to numerous segments of the economic system. This included Rs 1.7 lakh crore package deal comprising of free foodgrains and money to poor for 3 months introduced in March, and Rs 5.6 lakh crore stimulus offered by numerous financial coverage measures by the Reserve Bank of India (RBI).
India has been beneath nationwide lockdown since March 25 to curb the unfold of the COVID-19 pandemic.
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