Official sources told SMEpost.com that the idea behind this consolidation is to bring about “viability engineering” of the schemes so that the schemes which have outlived its utility are weeded out and those with very small funding like Rs 30,000 to Rs 40,000 are merged into other schemes so that the objective of boosting MSMEs development is achieved.
There are five crore MSMEs in the country, accounting for 11 crore employment, next only to agriculture. MSMEs accounted for 40 per cent of manufacturing in the country and 45 per cent of exports in the country. Jaitley has already indicated that there will be new initiatives in the budget boost MSMEs in the country.
Availability of bank credit without the hassles of collaterals and third party guarantees would be a major source of support to the first generation entrepreneurs to realise their dream of setting up a unit of their own Micro and Small Enterprise (MSE).
Keeping this objective in view, Ministry of Micro, Small & Medium Enterprises (MSME), Government of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and facilitate flow of credit to the MSE sector.
To operationalise the scheme, Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises. As part of the consolidation of schemes, CGTMSE would be strengthened in the budget, the sources said.
Under the scheme up to Rs one crore is provided. There are already one lakh entrepreneurs availing credit under the scheme and this will be further strengthened, the sources said.
Another objective is that the lender availing guarantee facility should endeavor to give composite credit to the borrowers so that the borrowers obtain both term loan and working capital facilities from a single agency.
The Credit Guarantee scheme (CGS) seeks to reassure the lender that, in the event of a MSE unit, which availed collateral free credit facilities, fails to discharge its liabilities to the lender, the Guarantee Trust would make good the loss incurred by the lender up to 85 per cent of the credit facility.
The government has already had a meeting with Reserve Bank of India on how to ensure that banks come out with schemes to rehabilitate sick SMEs so that they get revived. The Budget is expected to announce a repackaged scheme for this purpose so that sickness in MSMEs is dealt with effectively.
The government has already announced that there would be similar credit guarantee scheme for start ups, which would be given a final shape in the budget.
Monitoring of schemes for MSMEs is being stepped up in the country. It will be done zone wise starting with North Zone. The first such meeting will be held in Chandigarh on February 19 followed by the second one in the North East on February 26.
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