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MSMEs have been badly hit due to COVID19 need additional funding to meet operational liabilities built up, buy raw material and restart business. Government has taken major steps for MSME. 

Rs 3 lakh crores Collateral-free Automatic Loans for Businesses, including MSMEs

•    Decision: Emergency Credit Line to Businesses/MSMEs from Banks
and NBFCs up to 20% of entire outstanding credit as on 29.2.2020
•    Borrowers    with    up    to    Rs.    25    crore outstanding    and    Rs. 100    crore turnover eligible
•    Loans    to    have    4    year    tenor    with    moratorium    of    12    months    on Principal repayment
•    Interest to be capped
•    100% credit guarantee cover to Banks and NBFCs on principal and interest
•    Scheme can be availed till 31st Oct 2020
•    No guarantee fee, no fresh collateral
•    45 lakh units can resume business activity and safeguard jobs.

Rs 20,000 crores Subordinate Debt for Stressed MSMEs
•    Stressed MSMEs need equity support
•    GoI will facilitate provision of Rs. 20,000 cr as subordinate debt
•    Two lakh MSMEs are likely to benefit
•    Functioning    MSMEs    which    are    NPA    or    are    stressed    will    be
•    Govt. will provide a support of Rs. 4,000 Cr. to CGTMSE
•    CGTMSE    will    provide    partial    Credit    Guarantee    support    to Banks
•    Promoters of the MSME will be given debt by banks, which will then be infused by promoter as equity in the Unit.

Rs 50,000 cr. Equity infusion for MSMEs through Fund of Funds
•    MSMEs face severe shortage of Equity.
•    Fund of Funds with Corpus of Rs 10,000 crores will be set up.
•    Will provide equity funding for MSMEs with growth
potential and viability.
•    FoF will be operated through a Mother Fund and few
daughter funds
•    Fund structure will help leverage Rs 50,000 cr of funds at
daughter funds level
•    Will help to expand MSME size as well as capacity.
•    Will encourage MSMEs to get listed on main board of Stock

New Definition of MSMEs
•    Low threshold in MSME definition have created a fear among MSMEs of graduating out of the benefits and hence killing the urge to grow.
•    There has been a long-pending demand for revisions.

•    Definition of MSMEs will be revised
•    Investment limit will be revised upwards
•    Additional criteria of turnover also being introduced.
•    Distinction between manufacturing and service sector to be eliminated.
•    Necessary amendments to law will be brought about.

Other interventions for MSMEs

•    MSMEs currently face problems of marketing and liquidity due to COVID.
•    e-market linkage for MSMEs to be promoted to act as a replacement for trade fairs and exhibitions.
•    Fintech will be used to enhance transaction based lending using the
data generated by the e-marketplace.

•    Government has been continuously monitoring settlement of dues to MSME vendors from Government and Central Public Sector Undertakings.
•    MSME receivables from Gov and CPSEs to be released in 45 days

Mentioned information gather from recognised source. Please get in touch with experts to know more about it. 

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