MSMEs will get collateral free loans of upto Rs 100 cr through a new credit assessment model by PSU banks: FM

Speaking at the National MSME Cluster Outreach Programme in Bengaluru, Sitharaman said that the grievances of MSMEs will be solved after the introduction of a new credit guarantee scheme which will be introduced in the cabinet soon.

"The grievance, which has been for a very long time, is that MSMEs get working capital from banks, they don't get term loans, loans for plant and machinery. Now, with this guarantee, which was announced in the budget, for up to 100 crores, the guarantee will be provided, even if you are going to borrow more from the banks, for the first 100 crores, the guarantee will be given. And therefore you are going there collateral-free to that extent," she added.

Going further, the Union Finance Minister said, "You don't even need a third-party guarantee. No collateral, no third-party guarantee. The government gives you the guarantee for up to 100 crores."

She added that the banks will develop a new credit assessment model which will help the MSMEs. "Now we have announced in this budget that banks will do the credit assessment within themselves. Each bank will have their own credit assessment model," she said explaining the benefit of the new assessment system. Going further, the Union Finance Minister said that e-commerce trade hubs are also being set up with private partnerships which will facilitate international trade and export-related services. She said that 20 industrial clusters will be covered with the opening of these six new branches of Small Industries Development Bank of India (SIDBI) and it will help in strengthening the MSMEs in Karnataka. She said that SIDBI's branches across Karnataka have an outstanding portfolio of Rs. 1,169 crore with virtually nil NPAs. The capabilities of the industries not only in Karnataka but the whole nation will be strengthened due to the direct finance facilities of SIDBI, she added. .