Finance Minister Nirmala Sitharaman on Wednesday announced Rs 3 lakh crore collateral-free automatic loan for businesses, including MSMEs, as she shares details of the Rs 20 lakh crore economic relief package announced by Prime Minister Narendra Modi on Tuesday to soften the devastating impact of coronavirus and the lockdown on the economy.
The move, she said, will benefit 45 lakh small businesses. The loan will have 4-year tenure and will have 12 month moratorium, he 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 potentials. 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. 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.