Finance Minister Nirmala Sitharaman has announced a series of comprehensive measures to support the manufacturing and service sectors in India’s MSME sector.
The new initiatives are designed to facilitate credit access, improve financial stability, and promote global competitiveness for micro, small, and medium-sized enterprises (MSMEs).
During the presentation of the Union Budget 2024-25, Nirmala Sitharaman disclosed a credit guarantee scheme that would enable MSMEs to obtain term loans without the need for collateral or third-party guarantees.
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The Finance Minister also suggested that the loan limit under the Pradhan Mantri Mudra Yojana Scheme be increased from Rs 10 lakh to Rs 20 lakh. Entrepreneurs who have effectively repaid prior loans ranging from Rs 5 lakh to Rs 10 lakh are eligible for this. The program, which was initiated in 2015, offers financial support to microenterprises that operate in non-farm sectors.
Additionally, the budgetary provisions enable public sector banks to establish an in-house credit assessment model that is predicated on the digital footprint of MSMEs, thereby departing from conventional asset and turnover criteria.
Nirmala Sitharaman, said: “The scheme will operate on the pooling of credit risks of such MSMEs. A self-financing guarantee fund will provide to each applicant, a guarantee cover of up to Rs 100 crore while the loan amount may be larger,”
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