Government on 18 January approved a package for supporting the micro and small enterprises across the country, which entails augmenting the corpus of Credit Guarantee Trust Fund for such ventures and doubling the coverage of loans under the credit guarantee scheme.

The post-facto approval was granted at a meeting of the Union Cabinet chaired by Prime Minister Narendra Modi here.

Under the package, the corpus of the Credit Guarantee Trust Fund has been enhanced from Rs 2,500 crore at present to Rs 7,500 crore, which will be fully funded by the government. Moreover, coverage of the loans under the credit guarantee scheme has been increased from Rs 1 crore to Rs 2 crore

Further, coverage of the credit guarantee scheme for loans being extended to micro and small enterprises by NBFCs has also been increased.

Augmentation of the corpus would facilitate larger flow of credit to micro and small enterprises. This in turn, would lead to increased output and employment and thereby promote equity and inclusiveness.

“As the scheme provides credit without collateral and third-party guarantee, the start-ups would be encouraged to set up enterprises based on innovation and new ideas. Every operation is online and therefore, the system ensures public accountability,” an official statement said.

The measures would result in lowering the level of leverage; improving sustainability of the fund; enable the Trust to enhance the quantum of credit guarantee to larger number of MSEs; improve financial management; and limit the unfunded contingent liabilities.

Source: The Economic Times