Finance minister Nirmala Sitharaman expects this step to create a flow of Rs 2 lakh crore additional collateral-free credit to the sector, which is known for generating jobs.
“Support to the MSME sector along with enhancement of credit guarantee scheme will provide much needed relief to the sector,” said Bandhan Bank managing director Chandra Shekhar Ghosh.
Last year, the finance minister had proposed revamping the credit guarantee scheme for MSMEs. “The revamped scheme will take effect from 1st April 2023 through infusion of Rs 9,000 crore in the corpus. This will enable additional collateral-free guaranteed credit of Rs 2 lakh crore. Further, the cost of the credit will be reduced by about 1 percent,” she said, while presenting the budget for FY24.
“The continuation of the credit guarantee scheme for MSME lending in addition to digitalization of documents for MSME lending and computerization of agricultural cooperatives are likely to support credit off-take,” Karthik Srinivasan, senior vice president and group head of financial sector ratings at ICRA.
