MSMEs to Gain Boost with Collateral-Free Loans, New Credit Model

Union Finance Minister announces collateral-free loans up to Rs 100 crore for MSMEs. Under a new PSU bank credit model, MSME grievances will be addressed through a new credit guarantee scheme. Additionally, e-commerce hubs and SIDBI branches aim to bolster international trade and exports.

In a significant announcement, Union Finance and Corporate Minister Nirmala Sitharaman revealed that the Ministry of Micro, Small and Medium Enterprises (MSMEs) will receive collateral-free loans up to Rs 100 crore from PSU banks. This initiative stems from a new credit assessment model being introduced, aiming to alleviate MSME grievances.

The guarantee, unveiled in the recent budget, aims to enhance loan access for MSMEs, providing them the opportunity to borrow without collateral or third-party guarantees up to the specified amount. Sitharaman emphasized the government's commitment to supporting MSMEs as crucial drivers of economic growth.

Additional measures include setting up e-commerce trade hubs in partnership with the private sector to foster international trade. Furthermore, the establishment of new Small Industries Development Bank of India (SIDBI) branches in Karnataka is anticipated to offer substantial support to the MSMEs, backed by a strong financial portfolio.

(With inputs from agencies.)