PM Modi Announces MSMEs Loans Up To Rs 1 Crore, in 59 Minutes
Prime Minister Narendra Modi on Friday, 2 November, launched an MSME support programme, which, among other things, would aim to enhance credit access to micro, small and medium businesses (MSMEs).
Modi also launched a 59-minute loan programme and said that the government had decided to increase interest subvention on pre- and post-shipment credit from three percent to five percent, ANI reported.
“It is now mandatory that all the companies with turnover of more than Rs 500 crore will have to be join the Trade Receivables e-Discounting System (TReDS), so that MSMEs don't face trouble in cash flow,” the prime minister added.
The move will give a boost to the micro, small and medium enterprises (MSME) sector and help generate employment.
The program was also attended by Finance Minister Arun Jaitley and Minister of State for MSME Giriraj Singh.
The MSME sector constitutes a vast network of over 63 million units and employs 111 million people, contributing around 30 percent to the GDP. It accounts for about 45 percent of manufacturing output and around 40 percent to total exports.
A major obstacle for growth of MSMEs is their inability to access timely and adequate finance as most of them are in niche segments where credit appraisal is a major challenge.
As per the RBI's Mint Street Memo report, note ban imposed in November 2016 has led to further decline in the already falling credit to the MSME sector, while GST roll out has not made any significant positive impact on overall credit to the sector but has deeply dented their exports. About 97 percent of MSMEs operate in the informal sector.
(With inputs from ANI and PTI)