FM Nirmala Sitharaman announces Rs 3 lakh cr collateral free loan for select MSMEs

A day after PM Narendra Modi laid out his vision to get the Indian economy back on track after Coronavirus enforced lockdown, Finance Minister Nirmala Sitharaman announced a number of measures for small and medium enterprises today evening, providing some relief during the ongoing crisis. The finance minister during her press conference announced that MSMEs will be provided Rs 3 lakh crore collateral free loans. They need to have an outstanding loan of Rs 25 crore or have Rs 100 crore turnover. 

She said that these loans will be provided for a tenure of four years with a moratorium of 12 months. She said that 100% credit guarantee will be given to banks and NBFCs on principal and interest. 

"This loan is for 4 year tenure and is 100 per cent guaranteed. This will last till October 21, 2020. It will benefit 45 lakh units, allowing them to resume activity and safeguarding jobs," Sitharaman said.

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Here are the announcements made for MSMEs

- Borrowers with up to Rs 25 cr outstanding and Rs 100 cr turnover are eligible

- Loans to have 4 year tenor with moratorium of 12 months on princial repayment

- Interest to be capped

- 100% credit guarantee cover to banks and NBFCs on principal and interest

- Scheme can be availed till 31 October 2020

- No guarantee fee, no fresh collateral

- 45 lakh units can resume business activity and safeguard jobs

In total, the finance minister announced fifteen measures, out of which six were for micro, small and medium enterprises. "Today's tranche has 14 different measures. Six of these are for MSMEs, two are for EPF, two for NBFCs and MFIs, one to discoms, one to contractors, one real estate, three tax measures," Sitharaman said. 

FM Sitharaman also announced Rs 50,000 cr equity infusion for MSMEs through Fund of Funds. She said that this will be operated through a Mother Fund and few daughter funds. This will help to expand MSME size as well as capacity.