Government will soon set up of a credit guarantee fund for the SME sector, a government official told SMEpost.com on Friday.
The fund will have a Rs 20,000 crore corpus, which will help in refinancing commercial banks for their lending to SME sector. There may be small service charge, which banks may have bear for such refinancing facility.
This credit guarantee fund is been set up under Pradhan Mantri Mudra Yojana announced in this year’s budget by Finance Minister Arun Jaitley.
Micro Units Development & Refinance Agency Ltd. (MUDRA) is a new government institution to provide funding to the non-corporate, non-farm sector income generating activities of micro and small enterprises whose credit needs are below 10 Lakh.
All Non-Corporate Small Business Segment (NCSBS) comprising of proprietorship or partnership firms running as small manufacturing units, service sector units, shopkeepers, fruits/vegetable vendors, truck operators, food service units, repair shops, machine operators, small industries, food processors and others in rural and urban areas, are eligible for assistance under Mudra.
Bank branches would facilitate loans under Mudra scheme as per customer requirements. Loans under this scheme are collateral free loans.
The credit guarantee fund proposal is expected to go before the cabinet for approval shortly.
