MSMEs can get loans up to Rs 1 crore, in 59 minutes: PM Modi

Prime Minister Narendra Modi launched an MSME support programme on November 2, which would aim to enhance credit access to micro, small and medium businesses (MSMEs).

The programmes were unveiled as part of 12 new decisions to aid the sector, which the prime minister said were like “Diwali gifts for MSMEs.”

As per media reports, the prime minister also launched a 59-minute loan programme and said that the government had decided to increase interest subvention on pre- and post-shipment credit from three percent to five percent.

“I dedicate the 59-minute loan approval portal to you and it has started benefiting the MSMEs businessmen already,” prime minister Narendra Modi quoted at an event.

The prime minister added that, “it is now mandatory that all the companies with turnover of more than Rs 500 crore will have to be join the Trade Receivables e-Discounting System (TReDS), so that MSMEs don’t face trouble in cash flow.”

It is anticipated that the move will give a boost to the micro, small and medium enterprises (MSME) sector and help generate employment opportunities.

As per reports, the program was also attended by Finance Minister Arun Jaitley and Minister of State for (MSME) Giriraj Singh.

The outreach programme will is expected to run for 100 days covering 100 districts throughout the country.

According to data, the MSME sector constitutes a vast network of over 63 million units and employs about 111 million people, contributing around 30 percent to the GDP. It also accounts for about 45 percent of manufacturing output and around 40 percent to total exports.

As per reports, a major obstacle for growth of MSMEs is their inability to access timely and adequate finance as most of them are in niche segments where credit appraisal is a major challenge.

As per the RBI’s Mint Street Memo report, the note ban imposed in November 2016 has led to further decline in the already falling credit to the MSME sector. While the GST roll out has not made any significant positive impact on overall credit to the sector but has dented their exports. According to the report, about 97 percent of MSMEs operate in the informal sector.

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