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Budget - Credit Guarantee Scheme for facilitating term loans to MSMEs
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Saturday, 27 July, 2024, 08 : 00 AM [IST]
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Ashwani Maindola, New Delhi
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The Union Budget has announced a Credit Guarantee Scheme for MSMEs in the manufacturing sector for facilitating term loans to MSMEs for purchase of machinery and equipment without collateral or third-party guarantee.
Under the proposal, a separately constituted self-financing guarantee fund will provide, to each applicant, guarantee cover up to Rs 100 crore, while the loan amount may be larger.
Further, the Government shall introduce new assessment model for MSME credit eligibility, wherein public sector banks will build their in-house capability to assess MSMEs for credit, instead of relying on external assessment.
Also, Government shall provide credit support to MSMEs during stress period as well.
Besides, the Government proposed to enhance scope for mandatory onboarding in TReDS.
Finance Minister Nirmala Sitharaman has stated, "Facilitating MSMEs to unlock their working capital by converting their trade receivables into cash, I propose to reduce the turnover threshold of buyers for mandatory onboarding on the TReDS platform from Rs 500 crore to Rs 250 crore. This measure will bring 22 more CPSEs and 7,000 more companies onto the platform. Medium enterprises will also be included in the scope of the suppliers".
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