Finance Ministry Plans Credit Guarantee Scheme for MSMEs Amid West Asia Crisis

Even during the COVID-19 pandemic, an Emergency Credit Line Guarantee Scheme was announced for MSMEs, under which loans worth over ₹3.5 lakh crore were disbursed. Several conditions were imposed for availing loans.

Those who had not previously taken out loans were not eligible for this scheme. Entrepreneurs declared defaulters by banks were also excluded. Sources indicate that various sectors will be identified for loan disbursement under the credit guarantee scheme, and only those sectors will be eligible for this facility. Work on these aspects is currently underway.

Industrial organizations are also demanding the government grant loan repayment relief. MSMEs were granted similar relief during the COVID-19 pandemic. The advantage of this is that even if the entrepreneurs do not pay their installments for three-four months, their loan is not classified as non-performing asset (NPA), thus saving them from becoming defaulters.

Once an entrepreneur's loan becomes NPA, he faces difficulty in getting another loan. In view of the West Asia crisis, the government has announced a relief scheme of Rs 500 crore to reduce the insurance expenses of exporters. The import of 39 petrochemical items has been made duty-free, while the excise duty on petrol and diesel has been reduced by Rs 10 per liter.