Financial Benefits to MSMEs – Decoded
In the Present situation of COVID-19, All businesses are suffering be it small or big. MSMEs plays a vital role in the economy of our country, as they contribute maximum of the GDP, create maximum employment, and generate maximum capital for the country. The government also understands this well and very serious and comes forward to help the MSMEs for meeting their day to day bills, paying salaries, buying raw material, running and maintenance expenses of machineries and so on.
The Government offered Scheme of Rs.3 Lacs Crores as Collateral Free Automatic loans to the MSMEs to kick start the economy. The Government will also facilitate the provision of Rs. 20,000 crore as subordinate debt for stressed MSMEs and a Rs 50,000 crore equity infusion for MSMEs through Fund of Funds. The Government also took the opportunity to change the definition of MSMEs in the country. These Loans will be for the period of 4 yrs with a moratorium period of 12 months, which means MSMEs can pay only interest for the period of the first 12 months and after that EMI for 36 months will start. There will be 100% Credit guarantee cover to Banks and NBFCs on Principle and Interest and the scheme can be availed till 31st October, 2020.
Borrowers with up to Rs 25 crore outstanding and Rs 100 crore turnover are eligible to take the benefit of Collateral Free loans upto 20% of the loan outstanding as on 29.02.2020, subject to maximum of Rs.5 crs per unit. But it will be the discretion of Banks and NBFCs to assess before giving any new loan.
To support Self-Reliant India and Make in India concept, Government declared that the Government tenders upto Rs. 200 crs will be given only to Indian businessmen to avoid unnecessary and unfair competition with the global players.
Other measures for MSMEs, the e-market linkage for MSMEs will be promoted to act as a replacement for trade fairs and exhibitions. MSME receivables from Government and CPSEs will be released in 45 days.
The Government is making all efforts for the revival of economy and businessmen should also give their 100 % for the fast recovery of Economy and take advantage of Global business in the current situation, as Government is promoting MSMEs for the export of Goods and Services and become a global player.
Regards,
CS Amit Kumar Jain
Finance Consultant
Mentor Corporate Services Pvt Ltd.