Government under MSME has approved a package for providing support to the SMEs (Small and Micro Enterprises) across the country. This package would entail the augmentation of the corpus under the Credit Guarantee Fund for the SME ventures. This package would also aim to double the coverage of the loans under the credit guarantee scheme.
The approval of the nature post-facto was granted by Prime Minister Narendra Modi at a meeting which was conducted at the cabinet of the Union Minister. Under the package that has been granted, the corpus of the Credit Guarantee Trust Fund has been increased from the present 2500 crore INR to 7500 crore INR. This amount will be funded by the government. In addition to this, the coverage of the loans under the credit guarantee scheme has been enhanced from 1 crore INR to 2 crore INR.
Moreover, the coverage of the credit guarantee scheme for loans which has been extended to the SMEs (small and micro enterprises) by NBFCs has also incremented. Augmentation of the corpus would enhance the growth of the flow of credit to SMEs (Small and Micro Enterprises). This will, in turn, result in the increase of the employment and output and therefore, would enhance the overall promotion of the inclusiveness and equity.
As per the official statement, the credit guarantee scheme provides credit without third-party guarantee and collateral which would encourage the startups under the MSMEs to set up enterprises based on new ideas and innovation. Every operation has become online with innovation and therefore, there is a requirement of public accountability. The effective measures would help in lowering the level of leverage and in improving the sustainability of the fund. This would also improve the financial management and in limiting the unfunded contingent liabilities.