Addressing a joint sitting of Parliament in the Central Hall today, President Ram Nath Kovind said the Modi government’s credit guarantee coverage for Micro, Small & Medium Enterprises (MSMEs) has been increased to Rs 1 lakh crore with the objective of strengthening cooperative federalism.
"MSME Sector plays a vital role in economic growth. To maintain cash flow for small traders and businessmen, the government has taken several important steps. To easily make get credit coverage in MSME Sector businessmen like small traders or shopkeepers, the government is working on to increase the fund coverage to Rs 1 lakh crore," President Ram Nath Kovind said, while speaking on Micro, Small & Medium Enterprises (MSME) sector
President Kovind also announced a separate 'pension scheme' for small shopkeepers and retail traders. President Kovind said, "For the first time, a government has focused on the economic security of younger shopkeepers. A separate 'pension scheme' for small shopkeepers and retail traders has been approved in the first cabinet meeting. The scheme will benefit about 3 crore, small shopkeepers."
Notably, non-availability of timely and adequate credit at reasonable interest rate is one of the most important of all the problems faced by the MSEs.
What is the Credit Guarantee Fund Scheme for Micro and Small Enterprises:
The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS) was launched by the Government of India (GoI) to make available collateral-free credit to the micro and small enterprise sector. Both the existing and the new enterprises are eligible to be covered under the scheme, as per the official website of MSME Sector-- Development Commissioner Ministry Of Micro, Small and Medium Enterprises.
The Ministry of Micro, Small and Medium Enterprises, GoI and Small Industries Development Bank of India (SIDBI), established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Credit Guarantee Fund Scheme for Micro and Small Enterprises.
The Guarantee cover under the scheme is for the agreed tenure of the term loan/composite credit. In the case of working capital, the guarantee cover is of 5 years or block of 5 years.