New Credit Boost for MSMEs: Enhancing India's Economic Backbone

The Indian government aims to launch a new credit guarantee scheme for MSMEs, facilitating loans up to Rs 100 crore without collateral. Announced by Finance Minister Nirmala Sitharaman, this initiative will leverage a self-financing guarantee fund to bolster MSMEs' role in India's economy and exports.

The government is gearing up to unveil a novel credit guarantee scheme tailored for Micro, Small, and Medium Enterprises (MSMEs), as announced by Financial Services Secretary M Nagaraju on Thursday. The initiative, which supports loans up to Rs 100 crore without collateral, was introduced by Finance Minister Nirmala Sitharaman in her last budget speech.

This scheme aims at facilitating term loans for MSMEs to acquire machinery and equipment, significantly easing their operational hurdles. By pooling credit risks, a specially formed self-financing guarantee fund will offer each applicant guarantee cover, thus catalyzing economic growth and export efficiency in this vital sector.

With MSME exports skyrocketing from Rs 3.95 lakh crore in 2020-21 to Rs 12.39 lakh crore in 2024-25, their contribution to the nation's GDP has surged, reflecting a profound impact on India's economic landscape. The government remains committed to enhancing rural entrepreneurship through focused lending and strategic growth initiatives.

(With inputs from agencies.)