Finance Minister Nirmala Sitharaman announces Rs 3 lakh crore collateral-free automatic loans for businesses, including MSMEs

13 May, 2020 | newsx bureau

Nirmala Sitharaman National

Union Finance Minister Nirmala Sitharaman announced Rs 3 lakh crore collateral-free automatic loans for businesses, including MSMEs. The announcement was made a day after PM Modi announced Rs 20 la...

Union Finance Minister Nirmala Sitharaman on Wednesday announced Rs 3 lakh crore collateral-free automatic loans for businesses, including MSMEs. Sitharaman stated that borrowers with up to Rs 25 crore outstanding and Rs 100 crore turnover will be eligible for these. The loans will have a four year tenor with a moratorium of 12 months on principal payment, while interest will be capped, she added.

“100 percent credit guarantee cover to banks and NBFCs on principal and interest. The scheme can be availed till October 31, 2020. 45 lakh units can resume business activity and safeguard jobs,” the Finance Minister said. Besides this, Sitharaman stated that to provide stressed MSMEs with equity support, the government will facilitate the provision of Rs. 20,000 crore as subordinate debt.

The announcements came a day after Prime Minister Narendra Modi announced a Rs 20 lakh crore special economic package amid nationwide COVID-19 lockdown.”Prime Minister laid out a comprehensive vision, and that vision was laid out after wide consultations with several sections of the society… Essentially this is to spur growth and to build a very self-reliant India and that is why this whole initiative is called Atmanirbhar Bharat Abhiyan,” Sitharaman said.

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“Five pillars of ‘Atmanirbhar Bharat- economy, infrastructure, system, demography, and demand. Atmanirbhar (self-reliant) India does not mean India is to be an isolationist country,” she added. She also informed that beginning today, over the next few days she along with the team will address media to put forth Prime Minister’s vision “We shall not forget that we do have a responsibility towards the poor, needy, the migrant workers, divyang and the aged of the country,” Sitharaman said.

She also added that Rs 50,000 crore infusion will be done for MSMEs through funds of funds. For potential growth and viability, the government will provide equity funding. Funds of funds will be operated by Mother fund and few daughter funds. This will help in the expansion of MSME size and capacity.

Further, under Pradhan Mantri Garib Kalyan Package, the payment of 12 percent employer and 12 percent employee contributions were made into EPF. The support earlier for salary months March, April, and May which has now been extended by another three months of June, July, and August. Further, they will also provide liquidity relief of Rs 2500 crore to 3.67 lakh establishments and for 72.22 lakh employees.

Not just this, statutory PF control for both employer and employee will also be reduced to 10 percent from existing 12 percent for all establishments under EPFO for the next three months.

Finance Minister also said that loans to be given against state guarantee for the exclusive purpose of discharging liabilities of Discoms. PFC/REC to infuse liquidity of Rs 90,000 crore to DISCOMs against receivables