FM announces ₹3 lakh crore automatic loan for businesses, MSMEs

Finance Minister Nirmala Sitharaman said that the collateral free automatic loan will have four year tenure and will have 12 month moratorium.

Nirmala Sitharaman
The Finance Minister said a fund of funds for MSME is being created, which will infuse Rs 50,000 crore equity in MSMEs with growth potential (File Photo)

Finance Minister Nirmala Sitharaman on Wednesday (May 13) announced Rs 3 lakh crore collateral free automatic loan for businesses, including MSMEs. This will benefit 45 lakh small businesses, she said detailing parts of the Rs 20 lakh crore economic stimulus package.

The loan will have four year tenure and will have 12 month moratorium, she said. Also, Rs 20,000 crore subordinate debt will be provided for stressed MSMEs, she said adding this would benefit 2 lakh such businesses.

The Finance Minister said a fund of funds for MSME is being created, which will infuse Rs 50,000 crore equity in MSMEs with growth potential. Also, MSME definition has been changed to allow units with investment up to Rs 1 crore to be called micro units in place of Rs 25 lakh now. Also units with turnover up to Rs 5 crore to be called micro units, she said, adding a turnover based criteria is being introduced to define small businesses.

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The investment and turnover limits for small and medium businesses have likewise been raised to allow them to retain fiscal and other benefits, she said. Global tenders will be banned for government procurement up to Rs 200 crore, she said, adding this would help MSMEs to compete and supply in government tenders.

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