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MSME Minister Narayan Rane announces Rs 20 Lakh Scheme for GST-Exempted Micro Units under CGTMSE, revolutionizing access to credit for Informal Micro Enterprises
19-02-2024

Empowering Micro Enterprises: MSME Minister Launches Rs 20 Lakh Scheme for GST-Exempted Units Under CGTMSE

Transformative Initiative for Informal Micro Enterprises (IMEs)

In a groundbreaking move, MSME Minister Narayan Rane has introduced a revolutionary scheme specifically designed for Informal Micro Enterprises (IMEs), with the aim of bolstering their access to credit facilities and alleviating financial constraints. Launched under the esteemed Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), this visionary scheme offers collateral-free loans of up to Rs 20 lakh, liberating IMEs from the challenges posed by the Goods and Services Tax (GST) regime.

The Essence of the Scheme

Termed as the ‘Special Provision for Informal Micro Enterprises under Credit Guarantee Scheme,’ this initiative is strategically positioned to provide indispensable credit support to micro and nano enterprises. By effectively mitigating perceived credit risks associated with lending to IMEs, the scheme endeavors to create an environment conducive for financial institutions to extend loans, thereby fortifying credit flow within the Micro and Small Enterprises (MSE) sector.

Guarantee Cover and Lending Provisions

A distinctive feature of this scheme is the remarkable 85% guarantee cover it provides for unsecured loans up to Rs 20 lakh, specifically tailored for IMEs registered on the Udyam portal. This substantial guarantee cover is anticipated to serve as a powerful incentive for Member Lending Institutions (MLIs) to scale up their lending activities, empowering IMEs with the essential financial resources needed for growth.

CGTMSE Milestones: Paving the Way for Financial Inclusivity

Established in 2000, CGTMSE has achieved commendable milestones, surpassing an impressive Rs 1.50 lakh crore in guaranteed amounts during the current fiscal year alone. This substantial increase, up by 50% from the previous fiscal year, underscores the undeniable effectiveness of the scheme in bolstering financial inclusivity and support for MSEs.

Budgetary Support and Financial Inclusions

Finance Minister Nirmala Sitharaman’s strategic allocation of Rs 9,000 crore in the CGTMSE corpus during the 2023 budget speech reflects a concerted effort to fortify financial support for MSMEs. This infusion is projected to facilitate an additional Rs 2 lakh crore in collateral-free credit, thereby reducing the cost of credit by 1% and stimulating economic growth.

Udyam Portal and the Drive for Formalization

With an impressive count of nearly 1.41 crore IMEs already registered on the Udyam portal out of a total of 3.74 crore MSMEs, the government’s drive for formalization is gaining significant momentum. Initiatives such as the Udyam Assist Platform (UAP) play a pivotal role in simplifying the registration process for IMEs, enabling them to avail themselves of priority sector lending (PSL) benefits.

Seamless Integration with the Digital Ecosystem

The UAP, a central element in the report by the standing committee on finance led by Jayant Sinha, aspires to seamlessly integrate IMEs into the burgeoning digital ecosystem. This integration encompasses platforms like the Government e-Marketplace (GeM) and the Trade Receivables Discounting System (TReDS), facilitating IMEs’ participation in the digital economy and significantly expanding their market reach.

Conclusion: A Milestone for MSMEs

MSME Minister Narayan Rane’s introduction of the Special Provision for Informal Micro Enterprises under the Credit Guarantee Scheme signifies a significant milestone in the government’s relentless pursuit of bolstering financial inclusivity and support for MSEs. By extending collateral-free loans and streamlining access to credit facilities, this scheme holds the potential to catalyze growth and prosperity within the vibrant MSME sector, fostering economic resilience and sustainability.

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