The Union Cabinet on Wednesday approved additional funding of up to Rs 3 lakh crore to Micro, Small and Medium Enterprises (MSMEs) and MUDRA borrowers along with a special liquidity scheme for non-banking financial companies and housing finance companies.
Finance Minister Nirmala Sitharaman on May 13 announced a slew of economic measures to support stressed MSMEs and allocated Rs 3 lakh crore collateral-free automatic loans for businesses, including MSMEs, which she said would benefit 45 lakh units.
The Cabinet also approved modifications in the existing 'Partial Credit Guarantee Scheme' -- a portfolio guarantee for purchase by PSBs of bonds or commercial papers (CPS) with a rating of AA and below. The government has also extended the Pradhan Mantri Vaya Vandana Yojana up to March 31, 2023, beyond March 31, 2020. This will provide old-age income security and support to senior citizens. The government also approved the interest waiver of Hindustan Organic Chemicals Limited.
Sitharaman had earlier announced six measures to revive MSMEs that have taken a serious hit due to the lockdown implemented in order to curb the spread of COVID-19.
Rs 3 lakh crore collateral-free automatic loans for businesses including MSMEs was announced by the Centre. Under this, borrowers with up to Rs 25 crore outstanding and Rs 100 crore are eligible. Rs 20,000 crore subordinate debt for stressed MSMEs was also announced.
Third, Rs 50,000 equity infusion for MSMEs through fund of funds was announced on Wednesday. A fund of funds with a corpus of Rs 10,000 crore will be setup immediately, Sitharaman had said.
Fourth, the Centre revised the definition of MSMEs to help more firms fall under its purview. Investment limit was be revised upwards and additional criteria of turnover also being introduced.
The fifth measure said global tenders up to Rs 200 crore will be disallowed.
Lastly, MSME receivable from the governmentt and CPSEs will be released in 45 days.
Prime Minister Narendra Modi on May 12 announced the mega fiscal stimulus for the country facing an unprecedented economic crisis due to the coronavirus pandemic, saying it was aimed at making India a "self-reliant nation".