PM Modi’s Rs 3 lakh crore MSME loan program sanctioned this amount in one day

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Credit granted to businesses under this program will last four years with a 12-month moratorium on principal repayment.

Credit and financing for MSMEs: According to Finance Minister Nirmala Sitharaman, public sector banks sanctioned loans worth Rs 3,200 crore in a single day under the Rs 3 lakh crore unsecured loan program for MSMEs. “In a single day, June 1, 20, #PSB sanctioned unsecured loans worth Rs 3,200 crore through the emergency line of credit guarantee program, ”the minister’s office tweeted on Monday. The program was approved by the cabinet, chaired by Prime Minister Modi, last month. “Businesses / MSMEs have been hit hard due to Covid-19 (and) need additional funds to deal with accumulated operational debts, buy raw materials and restart business,” Sitharaman said while announcing the economic package of Rs 20 lakh crore.

In addition, MSMEs based in more than 3,000 Tier II cities “were covered in one day” under the loan program which “will allow them to pay salaries, rent and restocking costs,” said another tweet. MSMEs with outstanding Rs 25 crore and turnover of Rs 100 crore can apply for emergency credit from banks and NBFCs up to 20% of total outstanding credit as of February 29, 2020 .

Read also : Modi reassures MSMEs of growth with revised definition; says businesses can grow “without any worries”

“The deployment of unsecured loans worth Rs. 3 lakh crore for MSMEs will help inject much needed liquidity into the sector and help these units solve their cash flow problems. This decision will prove crucial for MSMEs to start their businesses and provide job protection for employees, ”said Mahesh Singhi, Founder and Managing Director of Singhi Advisors. Credit granted to businesses under this program will last four years with a 12-month moratorium on principal repayment. Banks and NBFCs have a 100 percent credit guarantee on the amount of principal and interest. MSMEs can benefit from the program until October 31, 2020. Sitharaman had stated that 45 lakh MSME units would be able to resume business activities and save jobs with the program.

However, a section of small businesses had recently been concerned about the reluctance of banks to lend. During a video conference with MSME Minister Nitin Gadkari last week, members of the Calcutta Chamber of Commerce said last week that “Despite the government giving a sovereign guarantee (under the crore loan program Rs 3 lakh), the bankers do not show up “. The minister, however, had asked them to send their grievances to him if it was to get a loan from the banks so the government could track and resolve the credit crunch.

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