: Cabinet approves Rs 3 lakh crore funding for MSMEs #FinanceIndia #StockMarketNEWS Cabinet approves Rs 3 lakh crore funding for MSMEs New Delhi, May 20 (KNN) The union cabinet on Wednesday cleared

@StockMarketNEWS Sun 24 May, 2020

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Cabinet approves Rs 3 lakh crore funding for MSMEs #FinanceIndia #StockMarketNEWS
Cabinet approves Rs 3 lakh crore funding for MSMEs New Delhi, May 20 (KNN) The union cabinet on Wednesday cleared Rs 3 lakh crore to Micro, Small and Medium Enterprise (MSME) and interested MUDRA borrowers by way of Emergency Credit Line Guarantee Scheme (ECLGS).

Under the Scheme, 100% guarantee coverage to be provided by National Credit Guarantee Trustee Company Limited (NCGTC) for additional funding of up to Rs 3 lakh crore to eligible MSMEs and interested MUDRA. borrowers, in the form of a Guaranteed Emergency Credit Line (GECL) facility, the government said in a statement.

The government will provide a corpus of Rs 41,600 crore for the scheme over the current and coming three financial years.

The main objective of the Scheme is to provide an incentive to Member Lending Institutions (MLIs), i.e., Banks, Financial Institutions (FIs) and Non-Banking Financial Companies (NBFCs) to increase access to, and enable availability of additional funding facility to MSME borrowers, in view of the economic distress caused by the COVID-19 crisis, by providing them 100 per cent guarantee for any losses suffered by them due to non-repayment of the GECL funding by borrowers, the statement added.

Finance Minister Nirmala Sitharaman last week had announced Rs 3 lakh crore collateral free loan for MSMEs.

The collateral free loans are for those with Rs 25 crore outstanding loan or Rs 100 crore turnover. The tenure of the loan will be 4-year and moratorium of 12 months, FM had said at a press conference.

The Finance Minister also announced 100% credit guarantee cover to banks and Non-Banking Financial Corporation (NBFCs) on principal and interest which will benefit 45 lakh units.

Sitharaman further said that the government will create a Fund of Fund to infuse Rs 50,000 crore as equity for MSMEs which are viable businesses and need hand holding.

She also asserted that in order to provide stressed MSMEs with equity support; government will facilitate the provision of Rs. 20,000 crores as subordinate debt.

"This will enable 45 lakh MSME units to resume business activity and also safeguard jobs," she added.