On 31st May 2020, Prime Minister Narendra Modi appointed a committee headed by Rajnath Singh to solve the difficulties faced in the implementation of Rs.3 Lakh crore collateral-free loan for Micro, Small & Medium Enterprises(MSME) announced by Finance Minister Nirmala Sitharaman on 13th May 2020 as a part of Rs.20 Lakh crore Covid-19 aid to raise the economy.
Collateral-free loan scheme:
i.The borrowers can borrow from the financial institutions without any asset or pledge collateral under this scheme.
Eligibility:The units with Rs.25 Crore outstanding credit and Rs 100 crore turnover
Tenure and rate of interest: 4-year tenure with interest rates capped according to the Finance Ministry and the moratorium will be for 12 months.
ii.FM announced 100% cover to banks and non-banking financial corporations(NDFCs) on principal and interest to benefit around 45 lakh MSME units to resume their business and secure their jobs.
i.Nitin Jairam Gadkari, MSME Minister asked the small business to directly mail him on facing trouble with collateral free loan scheme during the online interaction with the members of the Pune-based Mahratta Chambers of Commerce, Industries and Agriculture (MCCIA).
ii.He urged the MSME to obtain the solar park sector which would be feasible when the government reduces the transmission charges.
According to the revision of definitions,
Micro enterprises – investment upto Rs.1 crore and turnover under Rs.5 crore
Small enterprises – investment upto Rs.10 crore and turnover upto Rs.50 crore
Medium enterprises – investment upto Rs.50 crore and turnover under Rs.250 crore
About MSME Ministry:
Minister – Nitin Jairam Gadkari
Minister of State – Pratap Chandra Sarangi
President – Pradeep Bhargava
Director General – Prashant Girbane
Headquarters – Pune