Parul
According to reports, the Rs 3 lakh crore emergency credit borrowing scheme for the micro, small and medium Enterprises (MSMEs) announced by the finance minister as a part of the 20 lakh crore relief package will also cover retailers and other small businesses.
Retail businesses across the country got hampered due to the lockdown. However, they have been declared eligible for the scheme, although they are not recognised or registered as MSMEs. This inclusion is likely to cover members of the nearly seven crore strong trading community.
The emergency credit line facility provides 100 per cent guarantee coverage to member lending institutions or MLIs on up to Rs 3 lakh crore to eligible MSMEs.
As per the National Credit Guarantee Trust corporation MSMEs and small business enterprises constituted as proprietorships, partnerships, registered companies, trusts and limited liability partnerships (LLPs), and also interested borrowers under Pradhan Mantri Mudra Yojna or PMMY would be eligible for the scheme.
The assistance under this scheme will come in the form of additional working capital through a term loan facility for eligible MSMEs and other businesses.
What makes the new guarantee scheme attractive is the capped Interest rates at 9.25 per cent for banks, and at 14 per cent for NBFCs on loans provided for 4 years along with a 12-month moratorium. This improves lending as banks levy interest between up to 17 per cent and NBFCs charge up to 30 per cent.
