FM Nirmala Sitharaman announces collateral free automatic loans for MSMEs

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As the country battles coronavirus pandemic, Finance Minister Nirmala Sitharaman has announced Rs 3 lakh crores collateral-free automatic loans for Micro Small Medium Enterprises (MSME) sector. Her press conference came a day after PM Narendra Modi announced stimulus package of Rs 20 lakh crore to rejuvenate Indian economy battered badly due to coronavirus pandemic. The tenure of the loan being offered to businesses and MSMEs will be 4 years.

The Finance Minister said that the government will provide equity to MSMEs. She added that government will facilitate provision of Rs 20 thousand crore as subordinate debt. 

Check out details of the announcement made for MSMEs

1. Emergency Credit Line to businesses/MSMEs from banks and NBFCs up to 20% of entire outstanding credit as on 29.2.2020
2. Borrowers with up to Rs 25 crore outstanding and Rs 100 crore turnover eligible
3. Loans to have 4 year tenure with moratorium of 12 months on principal payment
4. Interest to be capped.
5. 100% credit guarantee cover to banks and NBFCs on principal and interest.
6. Scheme can be availed till October 31, 2020.
7. No guarantee fee, no fresh collateral.
8. 45 lakh units can resume business activity and safeguard jobs.

Global tenders upto Rs 200 crores to be disallowed

1. To help Indian companies against unfair competition from foreign companies, tenders of value upto Rs 200 crores will be disallowed when it comes to procurement by the government.
2. Necessary amendments of general financial rules will be effected.

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