Government announces Rs.3 lakh crore collateral-free automatic loans for MSMEs
- Finance Minister Nirmala Sitharaman announced Rs 3 lakh crore collateral free automatic loan for businesses, including MSMEs.
- Business/MSMEs have been badly hit due to COVID19 need additional funding to meet operational liabilities built up, buy raw material and restart business.
- Decision- Emergency Credit line to Business/MSMEs from Banks and NBFCs up to 20% of entire outstanding credit as on 29th February 2020.
- Borrowers with up to Rs.25 crore outstanding and Rs.100 crore turnover eligible.
- Loans to have 4 year tenor with moratorium of 12 months on Principal repayment.
- Interest to be capped
- 100% credit guarantee cover to Banks and NBFCs on principal and Interest
- Scheme can be availed till 31st October 2020.
- No Guarantee fee, no fresh collateral.
- 45 lakh units can resume business activity and Safeguards jobs.
About Collateral Free Loans-
A collateral free loan is a loan provided to the borrower without any guarantee. In simple terms, this means, you can approach a lender and borrow money from him at a certain rate of interest even if you have nothing to pledge or invest.
- The Ministry of Micro, Small and Medium Enterprises, a branch of the Government of India, is the apex executive body for the formulation and administration of rules, regulations and laws relating to micro, small and medium enterprises in India.
- Minister of MSMEs – Nitin Gadkari
- Minister of State – Pratap Chandra Sarangi